General Motors is in talks with banks to secure a $5 billion credit revolver as it prepares to file for an initial public offering of its stock this year, a source familiar with the plan said Friday.
A new credit line should provide GM with an additional liquidity cushion in the event of a possible double-dip recession and also bankroll GM's expansion in global markets including China, the source told Reuters.
He asked not to be named because he was not authorized to discuss the confidential plans.
GM is also considering issuing new capital in the IPO to address a $27 billion shortfall in its pension funding and improve its balance sheet further, sources involved in the preparations have told Reuters previously.
After the company emerged from bankruptcy, it revamped the way it operates, with sharply lower costs, stronger brands and gains in key emerging markets like China, Chief Executive Ed Whitacre told potential investors last week.
The first-of-its kind update on GM's financial progress by its leadership team comes as the largest U.S. automaker prepares for an initial public offering of its stock in what is expected to be one of the largest U.S. IPOs ever.
GM said its combined market share in four key growth markets — China, India, Brazil and Russia — stood at 13 percent in the first quarter, ahead of its overall market share of 11.2 percent globally.
The U.S. automaker, which ranks No. 1 in China auto sales with more than a 13 percent share, said industry sales in the country, the world's largest auto market, would rise about 20 percent year to 16.5 million vehicles this year.
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