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The automaker will issue formal payment promises to a third-party firm, which will advance funds to select suppliers on GM's behalf
General Motors $GM entered into a financing arrangement on August 7 with supply-chain management firm Procura Auto Parts LLC, under which Procura will prepay certain GM suppliers so they can acquire and hold inventory set aside for the automaker, GM said in a regulatory filing Tuesday.
The arrangement carries a maximum capacity of $4.5 billion. Procura will draw on financing from a bank syndicate that includes JPMorgan $JPM Chase Bank, N.A. and Banco Santander, S.A.; GM will back that financing by issuing irrevocable payment undertakings, or IPUs, committing to repay Procura once the inventory has been consumed in production. GM will repay those undertakings after it consumes the inventory in production, and no later than August 6, 2029, the company said. A twelve-month period during which GM may issue IPUs began August 7.
Interest on outstanding IPUs accrues at the Secured Overnight Financing Rate plus 1.55% per year, payable monthly, the company said. GM will also pay a fee of 0.25% per year on the daily average unused portion of the facility during that period.
