General Motors entered a $4.5 billion materials agreement with Procura Auto Parts to secure critical inventory and protect vehicle production against supply chain disruptions from events like extreme weather, cyberattacks, and excessive demand. Under the program, suppliers acquire and hold inventory on GM's behalf until needed, with JPMorgan Chase and Banco Santander providing funding support through irrevocable payment undertakings.
- Agreement Value: $4.5 billion maximum aggregate outstanding face amount with a 12-month funding period starting August 7, 2026
- Purpose: Secure critical inventory to protect vehicle production against supply chain disruptions including extreme weather, natural disasters, cyberattacks, and excessive demand
- Funding Sources: JPMorgan Chase Bank and Banco Santander provide funding with support from GM's irrevocable payment undertakings (IPUs)
- Payment Terms: GM pays a 0.25% annual ticking fee on unutilized portions plus interest at SOFR plus 1.55% per annum, with full repayment due by August 6, 2029
- Program Structure: Procura acquires and holds inventory on behalf of GM, handles tracking and reporting, while General Motors LLC administers the program
General Motors has entered a $4.5 billion materials agreement with Procura Auto Parts, according to a Securities and Exchange Commission (SEC) 8-K filing on Aug. 7.
In the filing, General Motors Co. (the company) and General Motors LLC (the coordinator) entered into a master irrevocable payment undertaking agreement with Procura Auto Parts LLC (the paying agent), allowing GM to issue IPUs to Procura in exchange for advancing funds to certain GM suppliers to acquire and hold inventory on behalf of GM.
Referring to this as the program, the filing continues on to state that the purpose of the program is to “secure supply of certain critical inventory for the production of retail and fleet vehicles in the event of supply chain disruptions that may arise for various reasons, including extreme weather, natural disasters, cyberattacks in our supply chain, excessive demand and other similar events.”
According to the filing, under the program, suppliers that receive funds will acquire and hold inventory until GM needs it to produce vehicles. Procura will obtain funding for the program from JPMorgan Chase Bank, N.A., and Banco Santander, S.A., with support from GM’s IPUs.
General Motors LLC will facilitate the administration of the program on behalf of GM, and Procura will also perform various tracking and reporting activities related to the acquired inventory, the filing noted.
GM will make payments on the IPUs no later than Aug. 6, 2029, after applicable parts from the inventory are used by GM or its affiliates. According to the filing, “the program provides for a maximum aggregate outstanding face amount of IPUs of $4.5 billion at any time (the facility limit).” IPUs may be issued by GM during the program’s 12-month funding period that commenced on Aug. 7, 2026.
GM will pay a “ticking fee of 0.25% per annum on the daily average unutilized portion of the facility limit during the availability period,” and interest on outstanding IPUs will accrue at “a rate equal to the secured overnight financing rate plus 1.55% per annum, payable monthly in arrears,” the filing stated.
The filing also notes that GM will account for the program as a product financing arrangement, and prepayments made to suppliers will be an asset of GM while each IPU will be reflected as unsecured debt. Furthermore, the payments made by Procura on behalf of GM will be reflected as an “operating cash outflow, offset by a corresponding financing cash inflow in the company’s consolidated statements of cash flows as if the company had made the payment to the suppliers itself,” the filing stated.
Payment made by Procura will be excluded from adjusted automotive free cash flow until GM purchases the inventory.
For more information, read the filing here.
