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Here's How General Motors is Battling Coronavirus Crisis
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General Motors Company (GM - Free Report) recently announced the implementation of a number of actions to boost the firm’s cash position in a bid to sail through the coronavirus crisis.
Reportedly, General Motors has tapped brakes on quarterly cash dividend as well as suspended its share-repurchase program citing the uncertainty caused by the coronavirus pandemic.
The auto giant also intends to extend $3.6 billion under its three-year revolving credit agreement to April 2022, in order to deal with the downturn caused by production shutdowns. The move is in line with the extension of the $2-billion 364-day revolving credit agreement to April 2021 that the company and its GM Financial (GMF) arm renewed earlier this month. Notably, General Motors entered the agreement with JPMorgan, Citibank and other lenders to provide $1.95 billion in available borrowing capacity, which requires it to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity.
In addition, GMF had $24 billion in liquidity at the end of 2019 and expects similar liquidity rates at the end of first-quarter 2020. The liquidity level is aimed at meeting cash requirements of at least six months, including new originations, without exposure to the capital markets.
Further, in March, General Motors withdrew the 2020 guidance and temporarily shut all U.S. factories to contain the spread of coronavirus.
Meanwhile, General Motors has also signed a $489.4-million contract with the U.S. Department of Health and Human Services (HHS) to build 30,000 ventilators in collaboration with Ventec Life Systems for the national stockpile to aid COVID-19 patients. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically-important ventilators.
General Motors currently carries a Zacks Rank #5 (Strong Sell).
The pandemic has become a concern for other global auto biggies as well, including Tesla (TSLA - Free Report) , Honda Motor (HMC - Free Report) , Toyota Motor (TM - Free Report) , Volkswagen AG, Goodyear Tire, Nissan, Harley-Davidson and Hyundai Motor. Several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Here's How General Motors is Battling Coronavirus Crisis
General Motors Company (GM - Free Report) recently announced the implementation of a number of actions to boost the firm’s cash position in a bid to sail through the coronavirus crisis.
Reportedly, General Motors has tapped brakes on quarterly cash dividend as well as suspended its share-repurchase program citing the uncertainty caused by the coronavirus pandemic.
The auto giant also intends to extend $3.6 billion under its three-year revolving credit agreement to April 2022, in order to deal with the downturn caused by production shutdowns. The move is in line with the extension of the $2-billion 364-day revolving credit agreement to April 2021 that the company and its GM Financial (GMF) arm renewed earlier this month. Notably, General Motors entered the agreement with JPMorgan, Citibank and other lenders to provide $1.95 billion in available borrowing capacity, which requires it to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity.
In addition, GMF had $24 billion in liquidity at the end of 2019 and expects similar liquidity rates at the end of first-quarter 2020. The liquidity level is aimed at meeting cash requirements of at least six months, including new originations, without exposure to the capital markets.
Further, in March, General Motors withdrew the 2020 guidance and temporarily shut all U.S. factories to contain the spread of coronavirus.
Meanwhile, General Motors has also signed a $489.4-million contract with the U.S. Department of Health and Human Services (HHS) to build 30,000 ventilators in collaboration with Ventec Life Systems for the national stockpile to aid COVID-19 patients. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically-important ventilators.
General Motors currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The pandemic has become a concern for other global auto biggies as well, including Tesla (TSLA - Free Report) , Honda Motor (HMC - Free Report) , Toyota Motor (TM - Free Report) , Volkswagen AG, Goodyear Tire, Nissan, Harley-Davidson and Hyundai Motor. Several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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