General Motors has reached a unique, up to $4.5 billion auto parts deal as it aims to preserve cash and prevent supply chain disruptions like ones that have hit the global automotive industry this decade.
In a public filing Tuesday, GM said the up to $4.5 billion purchasing facility includes a company called Procura Auto Parts that specializes in sourcing rare or critical parts. It will receive funding through a bank syndicate led by JPMorgan Chase and Banco Santander to prepay select suppliers on behalf of GM.
In return, GM will issue formal promises called irrevocable payment undertakings, or IPUs, to pay back the company after it uses the parts in production, no later than July 31, 2029. The deal allows GM to keep inventory costs off its books, while better securing future supply.
GM pays interest, plus an agreed-upon premium on what's used, as well as a customary annual fee on the unused portion during that year, according to the filing. GM declined to disclose what parts the company may be targeting.
The deal follows years of global automotive supply chain issues and comes after GM and other automakers reevaluated their sourcing or parts following U.S. tariffs and a push to move away from Chinese companies.
