GM locks in $6 billion credit line as strike's first two weeks cost $200M

DETROIT — General Motors on Wednesday secured a new $6 billion line of credit and estimated that the cost of the United Auto Workers strike was $200 million during the third quarter that ended Sept. 30, a company spokesman said.

The targeted strike against the Detroit Three automakers began on Sept. 15 and is now in its 20th day.

The union has struck two GM assembly plants and 20 parts distribution centers.

The strike cost at GM reflects 16 days in which production was stopped at one GM assembly plant, a mid-size pickup truck and van factory in Wentzville, Missouri. The UAW ordered a strike at a GM SUV assembly plant in Lansing, Michigan, on Sept. 29.

GM also shut its midsize Malibu sedan factory in Fairfax, Kansas, during the last week of September, blaming parts shortages caused by the strike.

The indicated average cost of $12.5 million a day could rise sharply if the UAW shuts down more vehicle production in the weeks ahead.

Against that backdrop, GM said in a securities filing that it has locked in a new, $6-billion line of credit through October 2024. JP Morgan and Citibank are listed as joint lead arrangers for the deal.

The new line of credit will bolster GM’s balance sheet against a protracted strike that could widen to cut off production of its most profitable vehicles — large Chevrolet and GMC pickup trucks and large SUVs such as the GMC Yukon and Cadillac Escalade. GM shares were down 0.5% in morning trading.

The additional liquidity will require GM to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. The terms of the credit agreement also restrict GM from mergers or sales of assets and limits on other, new debt.