General Motors plans to pay $3 billion to buy back nearly half of the preferred stock owned by the UAW Retiree Medical Benefits Trust, reports Detroit Free Press.
According to automaker, it would issue new debt financing to help fund the deal after negotiating a $3.2 billion purchase price on the preferred stock with the Voluntary Employees Beneficiary Association (VEBA) trust.
The company said the new debt would also be used for “general corporate purposes.”
GM did not specify how much debt it would issue or what interest rate it expects to obtain. For GM, the deal is effectively a refinancing to lower the interest rate it pays on the obligations.
After the deal, the VEBA will own about $3.5 billion in preferred shares, and the Canadian government will own $400 million in preferred shares. The deal is not connected to the U.S. government’s gradual selldown of its GM stock.
Source: Detroit Free Press
