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General Motors Start Repaying Debt, Employee Obligations by $11 Billion



General Motors Co. said it plans to reduce its debt and other obligations by $11 billion, cutting interest costs and preferred dividends by $500 million a year.

The automaker said it has paid $2.8 billion to the United Auto Workers retiree health-care trust, according to a statement on the company’s website. It also will buy back $2.1 billion of preferred stock from the U.S. Treasury and contribute at least $6 billion in cash and stock to hourly and salaried pension funds after its initial public offering.

The automaker said it has also secured a $5 billion, five- year revolving credit facility with a syndicate of banks, which it expects to leave “generally undrawn.”

“They’re trying to clean up their balance sheet to get it as clean as possible before the IPO,” Rebecca Lindland, an analyst at IHS Automotive in Lexington, Massachusetts, said in a telephone interview.

GM has filed a registration statement with the Securities and Exchange Commission for an IPO. The U.S. shares will begin trading by Nov. 19, people familiar with the matter said.

“These actions will bring down our leverage by $11 billion by reducing debt and improving our pension funding position,” Chief Financial Officer Chris Liddell said in the statement.

To contact the reporters on this story: Craig Trudell in New York at ctrudell1@bloomberg.net; David Welch in Lansing, Michigan, at dwelch12@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net  


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