General Motors Co. has secured $5 billion credit line from JPMorgan Chase & Co. (NYSE: JPM), Morgan Stanley (NYSE: MS) and Bank of America Corp (NYSE: BAC) and other firms, in a step which will clear the way for the automaker to offer stock to the public, according to a report from the Wall Street Journal.
Out of the four large-cap banks, Bank of America Corp (NYSE: BAC), Morgan Stanley (NYSE: MS) and JPMorgan Chase & Co. (NYSE: JPM) each committed up to $500 million to the credit line, according to the report. More than ten banks will be contributing to the facility, however, more could sign on as there was high demand for the loan. The total facility amount would remain $500 million, but the average buy-in would be lower.
A revolving credit facility allows a company to borrow money for just about any reason and would bolster General Motors Co.’s balance sheet and provide a sort of financial cushion if the company’s recovery slows down. Now that General Motors Co.’s backup funding is in place, the company is readying to file registration papers for an IPO as soon as Friday, the report said.
CEO Ed Whitacre hopes that the Treasury will offload the largest possible stake in the company so that it can end its stigma of being owned by the U.S. government. Last week, Whitacre said that he wanted the government to be out of the business entirely and was frustrated by the “Government Motors” label the company has earned.
The report said that the Treasury will likely take a more conservative amount of shares for sale at first, hoping to avoid a dilution of value by putting too many shares out at once.
