GM sets pricing on $5 bln credit facility

By Smita Madhur

NEW YORK, Aug 27 (RLPC) – General Motors Co [GM.UL] will
pay a spread of 400 basis points over the London Interbank
Offered Rate, or LIBOR, if it draws on its $5 billion revolving
credit facility in the first three months, banking sources told
Thomson Reuters LPC on Friday.

The drawn spread switches to a ratings-based pricing grid
thereafter. If the credit facility is undrawn, which it is
expected to be, GM will pay 75 basis points for the first three
months. The undrawn spread will also be based on ratings after
the first three months.

As previously reported by TRLPC, GM has lined up
commitments from 10 banks on its $5 billion revolving credit

The 10 banks include leads JPMorgan (JPM.N: ) and Morgan
Stanley (MS.N: ), U.S. banks Bank of America Merrill Lynch
(BAC.N: ), Citi (C.N: ) and Goldman Sachs (GS.N: ), and foreign banks
Barclays (BARC.L: ), Credit Suisse (CSGN.VX: ), Deutsche Bank
(DBKGn.DE: ), UBS (UBSN.VX: ) and RBC.

The banks initially committed $500 million each, although
some of the foreign banks are said to have been scaled back to
commitments of $400 million each, possibly because of potential
broader syndication of the loan in the future.

GM filed for an initial public offering of up to $100
million on Aug. 18. That does not represent the full amount
that GM hopes to raise, people familiar with the situation told
Reuters. GM could raise up to $20 billion in its IPO, the
people said.

GM said in its prospectus that secured indebtedness entered
into after July 10, 2009 is limited to $6 billion, provided
that commitments under any secured revolving credit facilities
do not exceed $4 billion. Secured indebtedness exceeding these
amounts is subject to an incurrence test under which total debt
divided by 12 month trailing EBITDA cannot exceed 3:1 and also
triggers repayments of 50 percent of the amount borrowed.

GM said in the prospectus that while it does not believe it
would require proceeds from the credit facility to fund
operating activities, “the arrangement would provide additional
liquidity and financing flexibility.”

“There is no assurance that we will reach a final agreement
on this facility. If we successfully execute a credit facility,
we expect to prepay the VEBA notes with available cash,” GM
said. At June 30, 2010, GM reclassified the VEBA notes, which
are notes owed to former GM retirees for healthcare benefits,
from long-term debt to short-term debt in an amount of $2.9
billion (including unamortized premium of $209 million).
(Reporting by Smita Madhur; Editing by Steve Orlofsky)

GM sets pricing on $5 bln credit facility