GM to reduce debt by $11B - Salt Lake Tribune

DETROIT

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General Motors said Thursday it is taking several steps to reduce its debt and pension obligations by $11 billion.

The company, which is expected to launch a public stock offering in the coming weeks, announced the following actions:

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A payment of $2.8 billion to the United Auto Workers Retiree Medical Benefits Trust.

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Plans to buy $2.1 billion of the preferred stock held by the U.S. Department of Treasury.

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Plans to contribute $4 billion in cash and $2 billion in common stock to GM?s hourly and salaried pension plans.

?These actions will bring down our leverage by $11 billion by reducing debt and improving our pension funding position,? Chris Liddell, GM?s vice chairman and chief financial officer, said in a statement.

Robert Schulz, a credit analyst with Standard & Poor?s, estimates that GM will be left with about $28.4 billion in debt and pension obligations after all of the steps GM announced today are complete.

Under the agreement with the U.S. Treasury, GM will purchase 83.9 million shares of preferred stock at $25.50 per share, or 102 percent of the estimated value. The transaction is expected to close after GM?s public stock offering.

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