General Motors announced Monday that it is suspending quarterly dividends and share buybacks to save cash, as the coronavirus pandemic has left factories and car dealerships at least partially closed in the United States.
In addition to reducing the dividend, which paid out $ 1.52 a year, GM has “taken other significant austerity measures to preserve available cash in the short term,” the company said in a statement. The automaker also extended its revolving credit facility by $ 3.6 billion over three years until April 2022 to boost its liquidity.
GM shares fell about 2% to $ 21.47 in pre-market trading on Monday. The stock is down 40% this year.
GM’s US factories have been closed since mid-March due to the Covid-19 epidemic that swept across the United States. The automaker, along with Ford Motor and Fiat Chrysler, is in talks with the United Auto Workers union to reopen the factories, but union leaders said last week they object to a restart in early May announced by several automakers automobiles.
GM and Ford are among the only major automakers that have yet to announce a deadline to restart production. Fiat Chrysler announced earlier this month that it plans to restart production within a week.
General Motors announced on Monday that it was suspending its quarterly dividend and share buybacks to preserve cash during the coronavirus pandemic.
JEFF KOWALSKY | AFP | Getty Images
GM’s decision to suspend its dividend comes more than a month after Ford did the same. Ford has also withdrawn its forecasts for 2020. Last month, GM suspended its forecasts for the year.
“We are continuing to improve our liquidity to help overcome the global market uncertainties created by this pandemic,” GM finance chief Dhivya Suryadevara said on Monday in a statement. “Strengthening our cash flow and strengthening our balance sheet will allow the company to create value for all of our stakeholders throughout this cycle.”
GM had approximately $ 32 billion in cash at the end of last month, of which $ 16 billion was drawn last month of its revolving credit facilities. The company also revealed on April 17 that it had signed a $ 1.95 billion, 364-day revolving credit agreement. The automaker said it had allocated the line of credit for the exclusive use of GM Financial, the company’s auto loan arm.