General Motors (NYSE: GM) skyrocketed 9% in early trading after announcing it would be drawing down USD16 Billion from its revolving credit facilities amid the impact from the fast-spreading coronavirus. In the hopes of being able to financially adapt, General Motors claims this to be a “proactive measure” that will potentially aid the company through this rough patch.
The stock had previously fallen 50% in 2020 with a USD26.3 Billion market value. Now the company expects to have USD15 Billion to USD16 Billion in cash by the month’s end.
“We are aggressively pursuing austerity measures to preserve cash and are taking necessary steps in this changing and uncertain environment to manage our liquidity, ensure the ongoing viability of our operations and protect our customers and stakeholders,” CEO Mary Barra said in a statement.
Additionally the company decided to defer its 2020 outlook due to changes the COVID-19 pandemic has brought forward. General Motors explained its financial arm, GM financial, anticipates to end the current quarter with approximately USD24 Billion in liquidity.
Multiple companies around the world are utilizing their credit lines to gain liquidity and help them expense their costs throughout this economic crisis. However, analysts believe that automakers in the U.S. have strong enough balance sheets and will prevail through this difficult time.
Automaker rival Ford, also drew down USD15.4 Billion from credit facilities to reinforce its balance sheet. Both GM and Ford have experienced employees become infected with the virus which has led to the shutdown of numerous plants.
All North American GM factories are closed until at least March 30th.