General Electric Co. (NYSE:GE) today announced new actions that it is taking to solidify its financial position. Last week, the company updated its first quarter outlook and withdrew its 2020 financial guidance due to uncertainty from the COVID-19 pandemic.
The company announced it is issuing new debt to be able to extend maturities from existing debt, and increase its liquidity position. It also said that it used some of the $20 billion proceeds it received from the sale of its biopharma unit to Danaher Corp. (NYSE:DHR) to repay $6 billion in intercompany loans to GE Capital on April 1, 2020. GE Capital is using those proceeds to restructure and reduce its debt, after having separately repaid $4.7 billion of debt that matured in the first quarter of 2020.
When the company pulled its guidance last week, it said because of the evolving impacts of the COVID-19 pandemic, it could not accurately predict the severity, duration, or path of recovery for its end markets, supply chains, and its own operations. The revised credit rating from S&P Global Inc. (NYSE:SPGI) brought GE within three notches of "junk" level. Part of the reason for S&P's revision was the belief that GE might not be able to reduce its debt enough, depending on the economic impacts and recovery.
Of today's announcement, GE Chairman and CEO Larry Culp said, "we are taking swift actions to de-risk and de-lever our balance sheet and prudently manage our liquidity amid a challenging external environment." As of March 31, 2020, GE said it it holding cash and cash equivalents of more than $47 billion.