GM clinches $11 bln credit facility amid Opel overhaul

Updated 05 November 2012
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GM clinches $11 bln credit facility amid Opel overhaul

DETROIT: General Motors Co. secured an $ 11 billion revolving credit facility, more than doubling its financial cushion and further strengthening the balance sheet of the largest US automaker.
The additional liquidity comes as GM works to stanch losses at its Opel brand in Europe. GM recently said it was aiming to break even in Europe by the middle of the decade.
The new credit facility replaces a $5 billion line the company secured more than two years ago in the run-up to its initial public offering in November 2010.
The $ 11 billion facility offers better terms as well as the ability to borrow in currencies other than the US dollar, GM said in a statement.
“The new revolver provides a significant source of backup liquidity and financial flexibility, further bolstering our fortress balance sheet,” Chief Financial Officer Dan Ammann said.
The deal gives GM a credit facility comparable to those of other companies close to its size, GM spokesman Dave Roman said. Ford Motor Co, the No. 2 US automaker, boosted its credit facility to $ 9.3 billion earlier this year.
GM’s new credit line consists of a $ 5.5 billion three-year facility and another $ 5.5 billion that matures in November 2017. Its earlier $ 5 billion facility would have matured in 2015.
GM Financial, GM’s in-house finance company, can borrow under the facility.
Thirty-five banks from 14 countries participated in the facility. Ammann said this signaled the financial community’s confidence in GM’s financial condition.
Earlier this year, GM was seeking a credit facility of as much as $ 10 billion, according to people familiar with the matter.
The US presidential race has repeatedly thrown GM into the spotlight, spurring debate about the effect of the company’s 2009 bankruptcy restructuring.
The US government poured $ 50 billion into GM during the financial crisis to help the one-time blue chip avoid liquidation. The US Treasury nearly halved its GM stake during GM’s IPO but still owns 500 million common shares.


BMW plans massive cost cuts to keep profits from sputtering

Updated 20 March 2019
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BMW plans massive cost cuts to keep profits from sputtering

  • ‘Our business model must remain a profitable one in the digital era,’ chief executive Harald Krueger said
  • Total number of employees is set to remain flat at around 135,000 worldwide

MUNICH: German high-end carmaker BMW warned Wednesday it expects pre-tax profits “well below” 2018 levels this year as it announced a massive cost-cutting scheme aimed at saving $13.6 billion (€12 billion) in total by 2022.
A spokesman said that “well below” could indicate a tumble of more than 10 percent.
The Munich-based group’s 2019 result will be burdened with massive investments needed for the transition to electric cars, exchange rate headwinds and rising raw materials prices, it said in a statement.
Meanwhile it must pump more cash into measures to meet strict European carbon dioxide (CO2) emissions limits set to bite from next year.
And a one-off windfall in 2018’s results will create a negative comparison, even though pre-tax profits already fell 8.1 percent last year.
Bosses expect a “slight increase” in sales of BMW and Mini cars, with a slightly fatter operating margin that will nevertheless fall short of their 8.0-percent target.
“We will continue to implement forcefully the necessary measures for growth, continuing performance increases and efficiency,” finance director Nicolas Peter said at the group’s annual press conference.
BMW aims to achieve €12 billion of savings in the coming years through “efficiency improvements” including reducing the complexity of its range.
“Our business model must remain a profitable one in the digital era,” chief executive Harald Krueger said.
This year, most new recruits at the group will be IT specialists, while the total number of employees is set to remain flat at around 135,000 worldwide.
Departures from the sizeable fraction of the workforce born during the post-World War II baby boom and now reaching retirement age “will allow us to adapt the business even more to future topics,” BMW said.
All the firm’s forecasts are based on London and Brussels reaching a deal for an orderly Brexit and the United States foregoing new import taxes on European cars.
“Developments in tariffs” remain “a significant factor of uncertainty” in looking to the future, finance chief Peter said, adding that “the preparations for the UK’s exit from the EU will weigh on 2019’s results as well.”
In annual results released ahead of schedule last Friday, BMW blamed trade headwinds and new EU emissions tests for net profits tumbling 16.9 percent in 2018, to €7.2 billion.