General Motors suspends dividend to preserve cash as outbreak disrupts production

General Motors said Monday it is suspending its quarterly dividend and stock buybacks to preserve cash as the coronavirus pandemic has left factories and auto dealerships at least partially closed across the U.S.

In addition to cutting the annual dividend, which paid $1.52 a share, GM has “taken other significant austerity measures to preserve near-term available cash,” the company said in a statement. The automaker also extended a $3.6 billion, three-year revolving credit facility to April 2022 to help bolster its liquidity.

Shares of GM were down about 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to $21.47 during premarket trading Monday. The stock is down 40{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year.

GM’s U.S. plants have been shuttered since mid-March due to the Covid-19 outbreak sweeping across the U.S. The automaker, along with Ford Motor and Fiat Chrysler, are in discussions with the United Auto Workers union to reopen the plants, but union leaders said last week they oppose restarting production in early May announced by several automakers.

GM and Ford are among the only major automakers that have yet to announce a time frame to restart production. Fiat Chrysler earlier this month announced plans to restart production in a week.

GM’s decision to suspend its dividend comes more than a month after Ford did the same. Ford also withdrew its 2020 guidance. GM last month suspended its guidance for the year.

“We continue to enhance our liquidity to help navigate the uncertainties in the global market created by this pandemic,” GM Chief Financial Officer Dhivya Suryadevara said Monday in a statement. “Fortifying our cash position and strengthening our balance sheet will position the company to create value for all our stakeholders through this cycle.”

GM had about $32 billion in available cash at the end of last month, including $16 billion it drew down last month from its revolving credit facilities. The company also disclosed April 17 that it signed a 364-day revolving credit agreement of $1.95 billion. The automaker said it has allocated the credit line for exclusive use by GM Financial, the company’s auto lending arm.