says it has secured an $11 billion revolving credit facility, an important financial step in the auto maker’s turnaround from its 2009 bankruptcy.
The line of credit replaces a $5 billion facility maturing in 2015 and gives the auto maker backup liquidity and greater financial flexibility for spending on its operations. GM does not expect to tap the new credit line immediately, according to reports.
The new line of credit also serves as an important endorsement of GM’s books from the financial community, which should make its stock more attractive to investors.
Shares of the auto maker’s stock have traded well below their initial public offering, which occurred two years ago this week. Investors have shied away from GM’s stock mostly due to its money-losing European operations, which will require investment over the next couple years to reach breakeven.
GM last week reported a $1.8 billion third-quarter profit, pushing year-to-date earnings to $5.0 billion. The auto maker reported a record $7.6 billion profit in 2011.
GM says 35 financial institutions from 14 countries participated in the credit line, underscoring the global nature of GM’s business.
“This level of commitment from the global banking community represents a strong vote of confidence in the financial strength of our company,” GM Chief Financial Officer Dan Ammann says in a statement.
GM expects its new credit line will be rated investment grade by each of the major credit-rating agencies.