GE 2015 Annual Report Download - page 166

FINANCIAL STATEMENTS PRESENTATION & POLICIES
138 GE 2015 FORM 10-K
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REORGANIZATION AND EXCHANGE OFFERS
During December 2015, General Electric Capital Corporation merged into GE. The merger and creation of a new intermediate holding
company was part of a reorganization of GE CapitDO¶VEXVLQHVVHVWKH5HRUJDQL]DWLRQSXUVXDQWWRZKLFK*(VHSDUDWHG*(&DSLWDO¶V
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company (GE Capital International Holdings Limited), which has a separate capital structure and will be supervised by the U.K.
Prudential Regulation Authority. The Reorganization, debt exchange offers (as described below) and establishment of GE Capital
International Holdings Limited were intended, among other things, to establish an efficient and simplified capital structure that is
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GE Capital. In addition, the debt exchange offers were designed to align the liabilities of GE Capital International Holdings Limited to its
assets from a maturity profile and liquidity standpoint, taking into consideration asset sales, and where appropriate, shortening the
maturity profile of targeted liabilities.
As part of the GE Capital Exit Plan, on September 21, 2015 GE Capital commenced private offers to exchange up to approximately
$30,000 million of certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On
October 19, 2015, given the high level of participation, the offering was increased by approximately $6,000 million with the aggregate
principal amount of approximately $36,000 million (representing $31,000 million of outstanding principal and $5,000 million of premium)
of outstanding notes being tendered for exchange and settled on October 26, 2015. The new notes that were issued at closing are
composed of $15,268 million of 0.964% Six Month Notes due April 2016, £778 million of 1.363% Six Month Notes due April 2016,
$6,107 million of 2.342% Notes due 2020, $1,979 million of 3.373% Notes due 2025 and $11,465 million of 4.418% Notes due 2035. Of
the $16,160 million exchanged into the Six Month Notes, $1,297 million had been previously classified in short-term borrowings. GE
Capital will continue to evaluate the opportunity to repurchase debt while maintaining our liquidity at the levels communicated as part of
the GE Capital Exit Plan. The new notes have been fully, irrevocably and unconditionally guaranteed by GE.
Immediately prior to the Reorganization, GE Capital had $5,000 million in aggregate liquidation preference of Series A, B and C
preferred stock outstanding. In connection with the Reorganization, on December 3, 2015, holders who previously held GE Capital
preferred stock were issued an aggregate liquidation preference of $5,950 million of new GE Series A, B and C preferred stock. The
Series A, B and C preferred stock bear an initial fixed interest rate of 4.00%, 4.10% and 4.20%, respectively, through their initial call
date and are callable on June 15, 2022, December 15, 2022 and June 15, 2023, respectively. Subsequent to the call date, the Series A,
B and C preferred stock will bear a floating interest rate equal to three-month LIBOR plus 2.28%, 2.32% and 2.37%, respectively,
thereafter.
Subsequent to the issuance of the preferred stock on December 3, 2015, in response to investor feedback, GE launched an exchange
offer on December 18, 2015 that allowed GE preferred stock investors to exchange their existing Series A, B and C preferred stock into
a Series D GE preferred stock. These Series D instruments bear an initial fixed interest rate of 5.00% through January 21, 2021, will
bear a floating rate equal to three-month LIBOR plus 3.33% thereafter and are callable on January 21, 2021. On January 20, 2016,
$2,687 million of Series A, $2,008 million of Series B and $999 million of Series C were exchanged into $5,694 million Series D GE
preferred stock. Post exchange, $91 million of Series A, $64 million of Series B and $95 million of Series C GE preferred stock remain
outstanding.
GUARANTEE
As part of the GE Capital Exit Plan, the Company and GE Capital entered into an amendment to their existing financial support
agreement. Under this amendment (the Amendment), the Company has provided a full and unconditional guarantee (the Guarantee) of
the payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial
paper issued or guaranteed by GE Capital identified in the Amendment. In the aggregate, the Guarantee applied to approximately
$85,829 million of GE Capital debt as of December 31, 2015. The Guarantee replaced the requirement that the Company make certain
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to provide the full and unconditional guarantee by the Company set forth in the Guarantee.
138 GE 2015 FORM 10-K