General Motors Corp.'s revolver traded up three points to 98 last week after Walter Borst, treasurer of General Motors Acceptance Corp., said GM is working on financial options to amend or replace its $5.6 billion credit facility. He made the comments during a presentation at GM/GMAC's Global Relationship Bank Conference. Borst said the company plans to amend or replace the bank debt by the end of the second quarter or early in the third quarter. A trader, whose bank traded $10-20 million of paper, said the announcement was expected, but that trading was still heavy on the revolver. Lenders would be paid back at par if the revolver is replaced.
GM's existing facility is unsecured and matures in June 2008. In a Securities and Exchange Commission filing, the company said a replacement facility or an amendment to the existing facility could include a security interest in certain GM assets, a reduction in the size of the facility and an extension of the term beyond 2008. GM's bonds were 1/2-3/4 points lower on the announcement. A security interest on a new bank deal would reduce the amount of assets backing the bonds.
In its 2005 annual report, GM says it may be unable to borrow under its credit facility because of its restatement of financial statements. A GM spokesman did not return calls seeking comment.