DETROIT -- General Motors Corp. on Friday said it will offer about $10 billion in debt and other securities as part of an effort to improve its financial flexibility and help fund its U.S. pension plans.

GM plans to raise about $10 billion with the new offerings, effectively doubling its original target to $20 billion for balance sheet strengthening in 2003.

The world's No. 1 automaker expects most of the proceeds will be used to partially fund GM's U.S. pension funds and other retiree benefit obligations. GM said it expects to make "significant" cash contributions to these funds by late 2003.

"The general cost of borrowing in U.S. markets is at historic lows, and we are acting quickly to take advantage of the favorable capital markets environment," John Devine, chief financial officer, said in a statement.

Detroit-based GM said its U.S. pension plans were $19.3 billion underfunded at the end of 2002. GM previously said it planned to contribute about $15 billion to its U.S. pension and retiree benefit plans by 2007.

GM contributed $5.8 billion to its U.S. pension and retiree benefit plans last year and a $1.2 billion worth of stock in its Hughes Electronics Corp. subsidiary earlier this year.

In addition, GM's finance arm, General Motors Acceptance Corp., said it will raise about $3 billion for general corporate purposes as part of its ongoing funding plan for 2003.


You can develop two new cars with $3 billion...but who knows what they will use it for...

 

Thanks for the info. Maybe something good will happen. I'd like to think that even I could do something pretty special with three billion dollars!

 

From http://story.news.yahoo.com/news?tmp...neralmotors_dc




Wow.. how many people are they taking care of again?

 

Doesn't Ford only have something like 300,000 employees?
I never knew GM had THAT many people working for them...

 

I work as an actuarial analyst while going to school. I specialize mostly in small plan annuities and pensions in this internship. But you'd be surprised how much money is needed to fund retirements. If someone retires at 65 with a $50000 a year pension until they die, use an average of 8 years until they die, then multiply that by the number who will retire next year of 300,000 employees, then add in those who are already retired, the numbers shoot into the billions faster than you realize. I'm actually surprised GM only borrowed $10 billion to grow the fund to $20 billion. Without doing any calculations right now and not knowing any data, I thought they'd need double that amount. I'd crunch numbers for you now, but I'm at work and I don't have the internet yet at my new apartment. Crunch some numbers if you're curious about it. You'll be shocked.