Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On May 13, 2020, General Motors Company (“GM”) entered into a new 364-Day Revolving Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, Citibank, N.A., as syndication agent, and the other lenders named therein (the “Facility”). The Facility is unsecured, provides available borrowing capacity of $2.0 billion, and matures on May 12, 2021.
Consistent with the terms of GM’s current revolving credit facilities, if GM fails to maintain an investment grade corporate rating from two or more of the following credit rating agencies: Fitch Ratings, Moody’s Investor Service and Standard & Poor’s, GM will be required to cause certain of its domestic subsidiaries to guarantee its obligations under the terms of the Facility.
Interest rates on obligations under the Facility are based on prevailing interest rates for Eurodollar loans or an alternative base rate, both subject to an applicable margin. The applicable margin will be based upon the credit rating assigned to the Facility or to senior, unsecured long-term indebtedness of GM.
The Facility contains representations, warranties and covenants that are typical for this type of facility, including restrictions on mergers or sales of assets and incurrence of debt, subject to exceptions and limitations, as well as restrictions on share repurchases and dividends. Additionally, GM is required to prepay borrowings and reduce commitments under the Facility (not below $1.0 billion) by an amount equal to 50% of the net cash proceeds of any future term loan debt and capital markets transactions incurred by GM, subject to certain customary exceptions for maturing or refinancing debt.
Some of the lenders under the Facility, and their affiliates, have various relationships with GM and its subsidiaries involving the provision of financial services, including cash management, investment banking, trust and leasing services, and foreign exchange and other derivative arrangements.
The foregoing description does not constitute a complete summary of the Facility and is qualified by reference in its entirety to the full text of the Facility filed herewith.