Capital Markets

GM Walks Away from Credit Line

The year-long revolver had been secured by the car maker's common-stock holdings in GMAC.
Stephen TaubJanuary 4, 2008

While some companies are scrambling for financing, General Motors is apparently in good enough shape to turn some down.

The struggling auto giant reported on Friday that it has terminated a $4.1 billion standby revolving credit agreement hatched in June with a syndicate of banks. The car maker had borrowed no money under the arrangement.

Secured by GM’s common-stock interest in GMAC LLC, its former financing subsidiary, the agreement was set to mature in June 2008. In 2006 a group of investors led by Cerberus Capital Management bought 51 percent of GMAC from the auto manufacturer, which held on to a 49 percent stake.

“After reviewing its liquidity position, GM believes that it has sufficient liquidity and financial flexibility to meet its capital requirements in the first half of 2008 without the Credit Agreement,” stated GM in a regulatory filing.

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