General Motors 2012 Annual Report Download - page 45

GENERAL MOTORS COMPANY AND SUBSIDIARIES
development activities; (2) acquiring certain Ally Financial international operations for approximately $4.2 billion; (3) payments to
service debt and other long-term obligations; (4) dividend payments on our Series A and Series B Preferred Shares of $0.9 billion; and
(5) certain litigation and income and indirect tax-related administrative proceedings that may require that we make payments or
deposit funds in escrow estimated at $0.8 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. Macroeconomic conditions could limit our ability to successfully execute our
business plans and therefore adversely affect our liquidity plans.
Recent Management Initiatives
Maintaining minimal financial leverage remains a key strategic initiative. We continue to monitor and evaluate opportunities to
optimize our liquidity position and capital structure in order to strengthen our balance sheet including options to fund and derisk our
pension plans. We continue to evaluate potential repayments of obligations prior to maturity, certain of which may be deeply
discounted. Any such repayments may negatively affect our liquidity in the short-term.
In December 2012 we purchased 200 million shares of our common stock from the UST at a price of $27.50 per share for a total of
$5.5 billion. The purchase price represented a premium to the prior day’s closing price of $25.49. We allocated the purchase price
between a direct reduction to shareholder’s equity of $5.1 billion and a charge to earnings of $0.4 billion, representing the premium
and recorded in Other automotive expenses, net.
In the year ended December 31, 2012 we made prepayments of $0.8 billion on debt obligations with a carrying amount of
$0.5 billion. We recorded a loss on extinguishment of debt of $0.3 billion which primarily represented the unamortized debt discount
on the GM Korea mandatorily redeemable preferred shares.
In November 2012 we entered into two new secured revolving credit facilities with an aggregate borrowing capacity of
$11.0 billion. These facilities replaced our five-year, $5.0 billion secured revolving credit facility and provide additional liquidity,
improved terms and increased financing flexibility including the ability to borrow in currencies other than U.S. dollars. The facilities
are described below in greater detail.
In November and December 2012 the Retiree Plan purchased group annuity contracts from an insurance company to pay and
administer future annuity payments to certain of our salaried retirees. We provided the salaried pension plan with funding through
contributions and short-term interest free loans of $2.4 billion, of which $2.3 billion was deemed a pension contribution at
December 31, 2012. Refer to Note 18 to our consolidated financial statements for additional details on pension activities.
Investment Actions
From time to time we consider the possibility of acquisitions, dispositions and strategic alliances that we believe would generate
significant advantages and substantially strengthen our business. These actions may include additional loans, investments with our
joint venture partners or the acquisitions of certain operations or ownership stakes in outside businesses. These actions may negatively
impact our liquidity in the short-term.
In November 2012 GM Financial entered into agreements with Ally Financial to acquire substantially all of Ally Financial’s
automotive finance and financial services business in Europe and Latin America and Ally Financial’s equity interests in GMAC-SAIC
that conducts automotive finance services operations in China. The purchase price to acquire this business and equity interests is
approximately $4.2 billion, subject to certain possible closing adjustments, and is expected to close in stages during 2013. Refer to
Note 4 to our consolidated financial statements for additional information on our agreement to acquire certain Ally Financial
international operations.
General Motors Company 2012 ANNUAL REPORT42