General Motors 2010 Annual Report Download - page 74

GENERAL MOTORS COMPANY AND SUBSIDIARIES
Liquidity and Capital Resources
Liquidity Overview
We believe that our current level of cash, marketable securities and availability under our secured revolving credit facility will be
sufficient to meet our liquidity needs. However, we expect to have substantial cash requirements going forward, which we plan to
fund through available liquidity and cash flow from operations. Our known material future uses of cash include, among other possible
demands: (1) pension and OPEB payments; (2) continuing capital expenditures; (3) spending to implement long-term cost savings and
restructuring plans such as restructuring our Opel/Vauxhall operations and potential capacity reduction programs; (4) reducing our
overall debt levels; (5) increase in accounts receivable due to the termination of a wholesale advance agreement with Ally Financial;
and (6) certain South American income and indirect tax-related administrative and legal proceedings may require that we deposit
funds in escrow or make payments which may range from $0.8 billion to $1.0 billion.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in the section of this report entitled
“Risk Factors,” some of which are outside our control. Macro-economic conditions could limit our ability to successfully execute our
business plans and, therefore, adversely affect our liquidity plans.
Recent Initiatives
We continue to monitor and evaluate opportunities to optimize our liquidity position including actively evaluating the possible sale
of non-core cost or equity method investments or other positions which could be significantly positive to our cash flow and/or
earnings in the near-term.
In the year ended December 31, 2010 we made net investments of $5.4 billion in highly liquid marketable securities instruments
with maturities exceeding 90 days. Previously, these funds would have been invested in short-term instruments less than 90 days and
classified as a component of Cash and cash equivalents. Investments in these longer-term securities will increase the interest we earn
on these investments. We continue to monitor our investment mix and may reallocate investments based on business requirements.
In June 2010 the German federal government notified us of its decision not to provide loan guarantees to Opel/Vauxhall. As a result
we have decided to fund the requirements of Opel/Vauxhall internally. Opel/Vauxhall subsequently withdrew all applications for
government loan guarantees from European governments. Through September 2010 we committed up to a total of Euro 3.3 billion
(equivalent to $4.2 billion when committed) to fund Opel/Vauxhall’s restructuring and ongoing cash requirements. This funding
includes cumulative lending commitments combined into a Euro 2.6 billion intercompany facility and equity commitments of Euro
700 million.
In October 2010 we completed our acquisition of AmeriCredit for cash of approximately $3.5 billion and changed the name from
AmeriCredit to GM Financial. We funded the transaction using cash on hand.
The repayment of debt remains a key strategic initiative. We continue to evaluate potential debt repayments prior to maturity. Any
such repayments may negatively affect our liquidity in the short-term. In 2010 GM Daewoo repaid in full and retired its $1.2 billion
revolving credit facility. In October 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the
VEBA Notes of $2.8 billion. In July 2010 our Russian subsidiary repaid a loan facility of $150 million to cure a technical default. In
March and April 2010 we repaid the remaining amounts owed under the UST Loans of $5.7 billion and Canadian Loan of $1.3 billion.
As described more fully below in the section entitled “Secured Revolving Credit Facility” in October 2010 we entered into a $5.0
billion secured revolving credit facility. While we do not believe the amounts available under the secured revolving credit facility are
needed to fund operating activities, the facility is expected to provide additional liquidity and financing flexibility.
In November and December 2010 we issued 100 million shares of our Series B Preferred Stock. We received net proceeds from the
Series B Preferred Stock offering of $4.9 billion. Refer to the section below entitled “Series B Preferred Stock Issuance” for additional
detail.
72 General Motors Company 2010 Annual Report