General Motors 2011 Annual Report Download - page 46

GENERAL MOTORS COMPANY AND SUBSIDIARIES
While we have repaid in full our indebtedness under the UST Credit Agreement, the executive compensation and corporate
governance provisions of Section 111 of the EESA, including the Interim Final Rule, will continue to apply to us for the period
specified in the EESA and the Interim Final Rule. Certain of the covenants in the UST Credit Agreement will continue to apply to us
until the earlier to occur of (1) our ceasing to be a recipient of Exceptional Financial Assistance, or (2) UST ceasing to own any direct
or indirect equity interests in us, and impose obligations on us with respect to, among other things, certain expense policies, executive
privileges and compensation requirements.
The UST Credit Agreement includes a vitality commitment which requires us to use our commercially reasonable best efforts to
ensure that our manufacturing volume conducted in the U.S. is consistent with at least 90% of the projected manufacturing level
(projected manufacturing level for this purpose being 1,934,000 units in 2011, 1,998,000 units in 2012, 2,156,000 units in 2013 and
2,260,000 units in 2014), absent a material adverse change in our business or operating environment which would make the
commitment non-economic. In the event that such a material adverse change occurs, the UST Credit Agreement provides that we will
use our commercially reasonable best efforts to ensure that the volume of U.S. manufacturing is the minimum variance from the
projected manufacturing level that is consistent with good business judgment and the intent of the commitment. This covenant
survived our repayment of the UST Credit Agreement and remains in effect through December 31, 2014 unless the UST receives total
proceeds from debt repayments, dividends, interest, preferred stock redemptions and common stock sales equal to the total dollar
amount of all UST invested capital.
UST invested capital totaled $49.5 billion, representing the cumulative amount of cash received by Old GM from the UST under
the UST Loan Agreement and the DIP Facility, excluding $0.4 billion which the UST loaned to Old GM under the warranty program
and which was repaid on July 10, 2009. This balance also did not include amounts advanced under the UST Ally Financial Loan as
the UST exercised its option to convert this loan into Ally Financial preferred membership interests previously held by Old GM in
May 2009. At December 31, 2011 the UST had received cumulative proceeds of $23.1 billion from debt repayments, interest
payments, Series A Preferred Stock dividends, sales of our common stock and Series A Preferred Stock redemption. The UST’s
invested capital less proceeds received totals $26.4 billion.
To the extent we fail to comply with any of the covenants in the UST Credit Agreement that continue to apply to us, the UST is
entitled to seek specific performance and the appointment of a court-ordered monitor acceptable to the UST (at our sole expense) to
ensure compliance with those covenants.
Canadian Loan
On July 10, 2009 through our wholly-owned subsidiary GMCL, we entered into the Canadian Loan Agreement and assumed a $1.3
billion term loan. GMCL repaid the final remaining amounts outstanding on the Canadian Loan in April 2010. Amounts repaid under
the agreement may not be reborrowed.
The Canadian Loan Agreement and related agreements include certain covenants requiring GMCL to meet certain annual Canadian
production volumes expressed as ratios to total overall production volumes in the U.S. and Canada and to overall production volumes
in the North American Free Trade Agreement region. The targets cover vehicles and specified engine and transmission production in
Canada. These agreements also include covenants on annual GMCL capital expenditures and research and development expenses. In
the event a material adverse change occurs that makes the fulfillment of these covenants non-economic (other than a material adverse
change caused by the actions or inactions of GMCL), the lender will consider adjustments to mitigate the business effect of the
material adverse change. These covenants survive GMCL’s repayment of the loans and certain of the covenants have effect through
December 31, 2016.
Refer to Note 17 to our consolidated financial statements for additional details on the Canadian Loan.
44 General Motors Company 2011 Annual Report