CHICAGO General Motors Co. (GM) has agreed to repurchase 120 million shares of Series A preferred stock from the United Auto Workers unions Retiree Medical Benefits Trust for about $3.2 billion, or $27 per share.
The trust holds 260 million shares of Series A preferred stock and Canada GEN Investment Corp. holds 16 million shares.
The deal depends upon the scheduled Sept. 30 closing of Detroit-based GMs offering of senior notes in three tranches maturing in 2018, 2023 and 2043.
In response to the buyback offer, New York-based ratings agency Moodys Investors Service Inc. raised GMs corporate family rating to Baa3 from Ba1, and assigned a Ba1 rating to the new offering of senior notes.
"The upgrade to an investment grade level reflects our expectation that GMs competitive position and credit metrics will continue to improve based on the strength of its new product introductions in a healthy U.S. market, its solid position in the increasingly important Chinese auto market and its focus on maintaining a robust liquidity profile," Moodys said.
"GM has been on a steadily improving operational and financial trajectory since it emerged from bankruptcy," Moodys senior vice president Bruce Clark said in a statement Sept. 23, adding the agency supports "the disciplines the company has embraced."