Welcome to the new normal.
With the coronavirus pandemic upsetting typical business operations and shuttering scores of businesses at least temporarily, companies across sectors are cutting expenditures and drawing down on their revolving credit facilities to add cash to their balance sheets. In many cases, companies are borrowing all available funds under the credit lines.
General Motors Co. (GM), for example, on Monday, March 24, notified lenders it would draw down $16 billion across three credit lines, following automotive peer Ford Motor Co. (F), which borrowed $15.4 billion on two credit lines on Thursday.
Companies drawing down all availability include Kraft Heinz Co. (KHC) on a $4 billion facility, auto parts maker Aptiv plc (APTV) on a $2 billion revolver, Darden Restaurants Inc. (DRI) on a $750 million facility, retailer Williams-Sonoma Inc. (WSM) on a $500 million revolver and food service and uniform rental company Aramark Corp. (ARMK) drawing about $230 million.
Drawing down on revolvers is typical for distressed companies ahead of a restructuring, but a different dynamic is in play now.
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