In October, General Electric (NYSE:GE) ousted CEO John Flannery after only 14 months, handing the top job to outsider Larry Culp instead. Culp has signaled that improving GE's balance sheet is one of his top priorities right now.

Culp got started quickly. In conjunction with GE's third-quarter earnings report, the company slashed its quarterly dividend by 92%, to a token $0.01 per share. This move will save nearly $4 billion a year, enabling General Electric to reduce its debt more quickly.

GE made another big move to raise cash this week, reaching a deal to sell a substantial portion of its stake in Baker Hughes, a GE Company (NYSE:BHGE). But the company's decision to sell a big chunk of Baker Hughes stock in the midst of a plunge in the latter's share price seems like a sign of desperation.

General Electric had a clear plan to raise cash

In a June investor presentation, GE set a goal of reducing its industrial net debt by $25 billion by 2020. It pointed to more than $60 billion of potential funding sources to achieve this target.

Most notably, GE announced a plan to sell 20% of its healthcare business while spinning off the rest as an independent public company. Between transferring $18 billion of debt and pension liabilities to the new company and selling 20% of the business, GE would likely reduce the parent company's net debt by more than $25 billion.

An MRI machine.

GE plans to spin off its healthcare business next year. Image source: Getty Images.

On top of that, GE is poised to reap more than $6 billion of asset sale proceeds over the next few months from selling its distributed power business and some of its transportation assets. There could be smaller asset-sale windfalls later on as GE completes its exit from the lighting business and trims other parts of its portfolio.

Back in June, General Electric also expected to have some free cash flow left over after paying its dividend that could be used for debt reduction. While the company's free cash flow expectations have come down substantially in recent months, so has its dividend -- so this should still represent a source of cash over the next couple of years.

Finally, GE highlighted its stake in Baker Hughes as another asset that could be monetized -- eventually. Yet the timetable for cashing out of that stake just accelerated dramatically.

Selling at the low

When General Electric merged its oil and gas business with Baker Hughes in mid-2017, it received a 62.5% stake in the combined company. GE agreed not to reduce that stake for at least two years. However, GE and Baker Hughes announced changes to their relationship on Tuesday. While the two companies will remain strategic partners, General Electric will no longer be required to hold all of its Baker Hughes shares through the middle of 2019.

Indeed, GE quickly executed a secondary offering of at least 92 million Baker Hughes shares. Baker Hughes is also repurchasing 65 million shares directly from GE. Between these two moves, the struggling industrial conglomerate has now sold nearly a quarter of the roughly 688 million Baker Hughes shares it held as of late October.

The offering of GE's Baker Hughes shares was priced at $23 per share. For comparison, Baker Hughes stock traded for more than $33 per share as recently as late September.

BHGE Chart

Baker Hughes, a GE Company Stock Performance, data by YCharts.

To put it a different way, General Electric is starting to sell its Baker Hughes stock just when the latter is trading at its lowest level since last year's GE-Baker Hughes deal. GE sold these shares in the midst of a market panic that has caused U.S. oil prices to plunge by more than 25% in the span of six weeks.

Why the sudden change in plans?

It's not clear yet why General Electric decided to speed up the timetable for reducing its stake in Baker Hughes. One possibility is that the company wanted to quash rumors about a potential cash crunch by showing investors that it has ample resources at its disposal.

If so, it was a costly signal to send, given that GE sold these Baker Hughes shares for about $2 billion less than their market value was six months ago. However, that "loss" is fairly insignificant in the context of the roughly $200 billion that has been erased from General Electric's market cap since early 2017.

The other possibility is that in spite of all of its other moves to raise cash and pay down debt, GE really was desperate to get its hands on some more cash. If that was the case, it suggests that General Electric's performance is still deteriorating rapidly -- and there could be more bad news to come.

Adam Levine-Weinberg owns shares of General Electric. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.