General Motors 2012 Annual Report Download - page 121

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Our obligations under the secured revolving credit facilities are guaranteed by certain of our domestic subsidiaries and by a
substantial portion of our domestic assets including accounts receivable, inventory, property, plant and equipment, intellectual
property and trademarks, equity interests in certain of our direct domestic subsidiaries as well as up to 65% of the voting equity
interests in certain of our direct foreign subsidiaries, in each case, subject to certain exceptions. The collateral securing the secured
revolving credit facilities does not include, among other assets, cash, cash equivalents and marketable securities as well as our
investments in GM Financial, GM Korea and in our China JVs. If we receive an investment grade corporate rating from two or more
of the following credit rating agencies: Fitch Ratings, Moody’s Investor Service and Standard & Poor’s, we will no longer have to
post collateral or provide guarantees from certain domestic subsidiaries under the terms of the facilities. If we fail to maintain an
investment grade corporate rating from at least two of the above listed rating agencies, these guarantees will be reinstated.
The secured revolving credit facilities contain representations, warranties and covenants customary for facilities of this nature,
including negative covenants restricting incurring liens, consummating mergers or sales of assets and incurring secured indebtedness,
and restricting us from making restricted payments, in each case, subject to exceptions and limitations. These restricted payments
include, among others, limitations on our ability to pay dividends and purchase our common stock in certain circumstances. The
facilities contain minimum liquidity covenants, which require us to maintain at least $4.0 billion in consolidated global liquidity and
at least $2.0 billion in consolidated U.S. liquidity.
Interest rates on obligations under the secured revolving credit facilities are based on prevailing per annum interest rates for
Eurodollar loans or an alternative base rate plus an applicable margin, in each case, based upon the credit rating assigned to the
secured revolving credit facilities or our corporate rating depending on certain criteria.
UST Credit Agreement
In April 2010 we repaid the full outstanding amount under the loan agreement with the United States Department of the Treasury
(UST). Amounts repaid under the agreement may not be reborrowed. While we have repaid the loans from the UST in full, certain of
the covenants in the UST credit agreement remain, including covenants regarding executive compensation and expense policies.
These covenants remain effective until it is determined that we are not a recipient of exceptional financial assistance or their earlier
termination.
Gains (Losses) on Extinguishment of Debt
In the year ended December 31, 2012 we prepaid and retired debt obligations with a total carrying amount of $514 million and
recorded a loss on extinguishment of debt of $250 million which primarily represented the unamortized debt discount on the GM Korea
mandatorily redeemable preferred shares of $242 million. In the year ended December 31, 2011 we prepaid and retired in full debt
facilities of $1.0 billion held by certain of our subsidiaries, primarily in GMNA and GMSA, and recorded a gain on these debt facilities of
$18 million. In the year ended December 31, 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of
the VEBA Note Agreement (VEBA Notes) of $2.8 billion, which resulted in a gain on extinguishment debt of $198 million.
Technical Defaults and Covenant Violations
Several of our loan facilities, including our secured revolving credit facilities require compliance with certain financial and
operational covenants as well as regular reporting to lenders, including providing certain subsidiary financial statements. Failure to
meet certain of these requirements may result in a covenant violation or an event of default depending on the terms of the agreement.
An event of default may allow lenders to declare amounts outstanding under these agreements immediately due and payable, to
enforce their interests against collateral pledged under these agreements or restrict our ability to obtain additional borrowings. No
technical defaults or covenant violations existed at December 31, 2012.
General Motors Company 2012 ANNUAL REPORT118