General Motors 2013 Annual Report Download - page 38

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
In April 2013 GM Korea made a payment of $0.7 billion to acquire, prior to the mandatory redemption date, the remaining balance
of GM Korea’s seven percent mandatorily redeemable preferred shares that had a carrying amount of $0.5 billion. We recorded the
difference of $0.2 billion as a loss on extinguishment of debt.
In September 2013 we issued $4.5 billion in aggregate principal amount of senior unsecured notes comprising $1.5 billion of 3.5%
notes due in 2018, $1.5 billion of 4.875% notes due in 2023 and $1.5 billion of 6.25% notes due in 2043. We used proceeds from the
issuance of these notes to purchase 120 million shares of our Series A Preferred Stock from the New VEBA for a total price of $3.2
billion, which was equal to 108.1% of their aggregate liquidation amount. The Series A Preferred Stock accrues cumulative dividends
at a 9% annual rate. We recorded a loss for the difference between the carrying amount of the Series A Preferred Stock purchased of
$2.4 billion and the consideration paid of $3.2 billion, which reduced Net income attributable to common stockholders by $0.8 billion.
In October 2013 we used proceeds from the issuance of the senior unsecured notes to make a payment of $1.2 billion to prepay
notes issued to the HCT. The HCT notes accrued interest at a 7% annual rate. This transaction and the purchase of the Series A
Preferred Stock from the New VEBA lowered our overall cost of funding as the senior unsecured notes carry a lower interest rate than
the dividends on the Series A Preferred Stock and the interest rate on the HCT notes.
In December 2013 we sold our investment in Ally Financial’s common stock for $0.9 billion. Also in December 2013 we sold our
seven percent equity stake in PSA for $0.3 billion. These transactions released capital from non-core investment assets and allow the
funds to be used for other corporate purposes.
Automotive
Available Liquidity
Total available liquidity includes cash, cash equivalents, marketable securities and funds available under credit facilities. At
December 31, 2013 our total available liquidity was $38.3 billion, including funds available under credit facilities of $10.4 billion.
The amount of available liquidity is subject to intra-month and seasonal fluctuations and includes balances held by various business
units and subsidiaries worldwide that are needed to fund their operations.
We manage our liquidity primarily at our treasury centers as well as at certain of our significant consolidated overseas subsidiaries.
Available liquidity held within North America and at our regional treasury centers represented approximately 84% of our available
liquidity at December 31, 2013. A portion of our available liquidity includes amounts deemed indefinitely reinvested in our foreign
subsidiaries. We have used and will continue to use other methods including intercompany loans to utilize these funds across our
global operations as needed.
Our cash equivalents and marketable securities balances include investments in U.S. government and agency obligations, foreign
government securities, time deposits and corporate debt securities, and are primarily denominated in U.S. Dollars. We expect to
maintain a sufficient amount of CAD denominated cash investments to offset certain CAD denominated liabilities, which primarily
relate to pension and OPEB liabilities. These cash investments will incur foreign currency exchange gains or losses based on the
movement of the CAD in relation to the U.S. Dollar and will therefore reduce our net CAD foreign currency exchange exposure. We
held cash investments in CAD denominated securities of $1.7 billion at December 31, 2013. These funds continue to be available to
fund our normal ongoing operations and are included in our available liquidity.
Our investment guidelines, which we may change from time to time, prescribe certain minimum credit worthiness thresholds and
limit our exposures to any particular sector, asset class, issuance or security type. Substantially all of our current investments in debt
securities are with A/A2 or better rated issuers.
We use credit facilities as a mechanism to provide additional flexibility in managing our global liquidity and to fund working
capital needs at certain of our subsidiaries. The total size of our credit facilities was $11.2 billion and $11.4 billion at December 31,
2013 and 2012. Our primary borrowing capacity under credit facilities comes from our secured revolving credit facilities comprising a
three-year, $5.5 billion facility maturing in 2015 and a five-year, $5.5 billion facility maturing in 2017. We have not borrowed against
36
2013 ANNUAL REPORT