GM to Pay Down $11 Billion of Debt

DETROIT ( TheStreet) -- Moving to pare debt by about $11 billion and to shore up liquidity, General Motors ( symbol) said Thursday it will buy back all of the government's preferred stock and pay a note held by the UAW retiree medical benefits trust.

The company also announced a contribution of at least $6 billion to its pension plans as well as completion of a $5 billion, five-year revolving credit facility, which will likely "remain generally undrawn."
GM

GM said it will repurchase $2.1 billion in preferred stock purchased under the Troubled Asset Relief Program on completion of its IPO, expected in November. The U.S. Treasury has invested $49.5 billion in GM. Following the repurchase, it will have received $9.5 billion in repayment, interest and dividends, it said Thursday. Additionally the Treasury holds 61% of GM's common stock.

The automaker will repay $2.8 billion outstanding on a 9% secured note held by the union's retiree medical benefits trust following the IPO. Combined, the repayments "will bring down our leverage by $11 billion by reducing debt and improving our pension funding position," said CFO Chris Liddell in a prepared statement.

In an additional step, GM will terminate a plan entitling it to accelerated receipt of payments when its dealers borrow money to fund inventory purchases. The move will result in an estimated $2 billion increase to GM's accounts receivable balance.

-- Written by Ted Reed in Charlotte, N.C.

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