Please ensure Javascript is enabled for purposes of website accessibility

GE Announces More Plans to Firm Balance Sheet

By Howard Smith - Apr 13, 2020 at 10:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The move comes after S&P Global revised its credit rating to "negative" from "stable."

General Electric Co. (GE -0.20%) 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. (DHR 1.79%) 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.

man pushing big ball labeled "debt" up a hill

Image source: Getty Images.

Economic impacts

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. (SPGI 1.86%) 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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
$63.54 (-0.20%) $0.13
S&P Global Inc. Stock Quote
S&P Global Inc.
$343.33 (1.86%) $6.27
Danaher Corporation Stock Quote
Danaher Corporation
$258.05 (1.79%) $4.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.