General Motors borrows $16 billion to deal with coronavirus shutdowns

General Engines (NYSE:GM) said it would draw about $16 billion from its existing lines of credit in a bid to boost its cash reserve as it prepares for a long shutdown.

The company also withdrew its advice at investors for 2020.

GM said the borrowed funds will add to its existing cash hoard, which it estimates will be between $15 billion and $16 billion at the end of March.

CEO Mary Barra said GM is strengthening its balance sheet to deal with the COVID-19 pandemic. Image source: General Motors.

GM had $17.3 billion in cash as of Dec. 31, according to its latest report.

GM’s decision follows a series of similar actions by its rival Ford Motor Company (NYSE:F). Ford said last week that it had raised $15.4 billion of its existing lines of credit, and that it will suspend its dividend payments for the time being.

GM’s statement on Tuesday did not mention its dividend.

CEO Mary Barra said the restructuring work the company has done over the past few years has positioned it well for an economic downturn. But she acknowledged it was an extraordinary time for the company.

“We are aggressively pursuing austerity measures to preserve liquidity and taking the necessary steps in this changing and uncertain environment to manage our liquidity, ensure the continued viability of our operations and protect our customers and stakeholders,” Barra said.

General Motors, Ford and Fiat Chrysler Automobiles (NYSE:FCAU) have it all close factories in North America and elsewhere in response to the coronavirus pandemic.

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