GE, GM Say Loan Not Pulled

The companies say GM's credit facility wasn't recently cut off. It's been phasing out for a year.
By Nat Worden ,

General Motors

(GM) - Get Report

and

General Electric

(GE) - Get Report

said Tuesday that GE Commercial Finance has not pulled out of a $2 billion loan agreement used to pay the automaker's suppliers.

The joint statement disputed stories published by several media outlets earlier Tuesday.

The world's largest automaker, which last week slashed its earnings forecast for 2005, said GE Commercial Finance informed it in May 2004 that the program would end by December 2005, and GM notified its suppliers accordingly. Over the last 10 months, steps have been taken for an orderly exit from the deal.

On Monday, GM said it was ramping up a program to offer an early-payment program to its suppliers through its own financing arm, GMAC Commercial Finance. During the transition period, GE Commercial Finance is continuing to provide payments to GM's suppliers.

GM's ability to finance its operations and obligations has become a sensitive issue lately as it has struggled under the weight of underperforming operations and high commodity and legacy costs. Credit-rating firms have recently said the company's rating, which currently stands one step above junk status, is under review. If GM's credit rating were lowered to junk, that could raise its financing costs significantly.

Its shares were recently up 6 cents, or 0.2%, to $29.75.

Loading ...