General Motors (GM) announced on Monday the suspension of both the quarterly dividend payment and the share repurchase program as austerity measures to save liquidity due to the financial situation created by the COVID-19 pandemic.
The automaker’s chief financial officer, Dhivya Suryadevara, said in a statement that “we continue to improve our liquidity to help navigate uncertainties in the global market created by this pandemic.”
“Strengthening our cash position and strengthening our balance sheet will put the company in a position to create value for all of our stakeholders in this cycle,” added Suryadevara.
In addition to the suspension of the dividend and the repurchase of shares, GM has extended until April 2022 a revolving credit agreement worth $3.6 billion.
In early April, GM and GM Financial, the manufacturer’s financial arm, already announced the extension of a $2 billion revolving loan until April 2021.
In March, GM cashized $16 billion of credit lines available to increase its liquidity in the face of the crisis caused by COVID-19.
On May 6, GM will release their financial results for the first quarter of the year that will be seriously affected by the economic slowdown caused by the COVID-19 pandemic worldwide.
GM, Ford and Fiat Chrysler (FCA) are negotiating with the United Auto Workers (UAW) union, federal, and state authorities in the United States to reopen their factories in North America.
Companies and federal authorities want to return to production in early May, but workers’ representatives consider that date to be too risky.
Last month, GM cut the wages of its 69,000 employees worldwide by 20% to save liquidity. The reduction could be extended for six months but GM said it will repay the amount saved and with interest in the future.