General Motors 2013 Annual Report Download - page 91

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Unsecured Debt
Senior Unsecured Notes
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. These notes contain terms
and covenants customary of these types of securities including limitations on the amount of the secured debt we may issue.
In connection with the issuance of these notes we entered into a registration rights agreement that requires us to file a registration
statement with the Securities and Exchange Commission (SEC) for an exchange offer with respect to the senior notes. If the
registration statement has not been declared effective by the SEC within 365 days after the closing date of the debt issuance, if we fail
to consummate the exchange offer within 30 business days after such target effective date or if the registration statement ceases to
remain effective, we will be required to pay additional interest of 0.25% per annum for the first 90 day period following such event
and an additional 0.25% per annum for each subsequent 90 day period prior to the consummation of the exchange offer up to a
maximum additional interest rate of 0.5% per annum.
HCT Notes
As part of the establishment of the HCT to provide retiree healthcare benefits to certain active and retired employees in Canada, we
issued notes to the HCT with a fair value of $1.1 billion in October 2011. We recorded a premium of $42 million at issuance. The
notes accrued interest at an annual rate of 7.0%. The notes were due in periodic installments through 2018. In October 2013 we
prepaid the HCT notes in full for $1.2 billion. Refer to Note 15 for additional information on the HCT settlement.
GM Korea Preferred Shares
Prior to April 2013 GM Korea had outstanding non-convertible mandatorily redeemable preferred shares. Dividends accrued at a
rate of 2.5% through October 2012 and increased to 7.0% through 2017. In December 2012 GM Korea made a payment of $671
million to redeem early a portion of shares that had a carrying amount of $429 million and the difference was recorded as a loss on
extinguishment of debt. In April 2013 GM Korea made a payment of $708 million to redeem early the remaining balance of the shares
that had a carrying amount of $468 million and the difference was recorded as a loss on extinguishment of debt.
Gains (Losses) on Extinguishment of Debt
In the year ended December 31, 2013 we prepaid and retired debt obligations with a total carrying amount of $1.8 billion and
recorded a net loss on extinguishment of debt of $212 million which primarily represented the unamortized debt discount on the GM
Korea mandatorily redeemable preferred shares. In the year ended December 31, 2012 we prepaid and retired debt obligations with a
total carrying amount of $514 million and recorded a net loss on extinguishment of debt of $250 million which primarily represented
the unamortized debt discount on the GM Korea mandatorily redeemable preferred shares. 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.
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. A
foreign subsidiary was not in compliance with certain financial covenants under its $77 million term loan facility. We are evaluating
alternatives to cure this financial covenant issue and included this liability in Short-term debt and current portion of long-term debt.
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