September 24, 2012 / 4:12 PM / 7 years ago

UPDATE 2-RLPC: General Motors readies $10B credit

By Michelle Sierra

NEW YORK, Sept 24 (Reuters) - General Motors Co is in market with $10 billion in revolving credit facilities that will beef up liquidity and refinance existing debt, sources told Thomson Reuters LPC.

JP Morgan is leading the deal that has launched to 10 senior lenders. The 10 senior lenders are understood to be part of the company’s existing bank group.

GM spokesman Jim Cain declined to comment. JP Morgan declined to comment.

The company is asking its lenders for at least $8 billion and as much as $10 billion, split between a $5 billion, five-year revolver and a $5 billion, three-year revolver, sources said. The final amounts have yet to be determined since discussions are said to be ongoing.

The company is currently in active dialogue with top-tier lenders. At the top level, the company is asking lenders for commitments of $600 million apiece. The company expects to line up top-tier commitments this week. A second tier of commitments of $350 million will be offered to lenders during a second round of syndication to take place in the next three weeks.

Individual commitments will be allocated across both the three-year and the five-year credit facilities.

If the company draws down on the facilities, pricing is expected to be around 250bp over Libor. The revolvers are expected to pay 37.5bp on an undrawn basis.

The company is offering upfront fees between 30bp and 50bp, depending upon the size of a bank’s commitment. The company is also offering a flat fee in addition to the upfront fee.

The financing will refinance an existing facility of $5 billion, other debt and provide added liquidity.

The $5 billion financing was followed by the $18.1 billion privatization IPO. The facility matures in October 2015. Citigroup leads the existing $5 billion deal. Bank of America Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Royal Bank of Canada and UBS are also senior lenders.

As of June 30, the company had an additional $918 million of debt.

General Motors - the world’s largest automaker by unit sales - entered its existing $5 billion, five-year facility in 2010, returning to the capital markets a year after it emerged from a bankruptcy. The company’s executives have repeatedly emphasized the U.S. automaker’s “fortress balance sheet,” which at the end of the second quarter included almost $33 billion in cash and securities. However, analysts and investors are focused on when and how GM will fix its money-losing European operations and how much that will cost, as well as how the automaker will further reduce its pension obligations beyond what it has already done.

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