GE Capital Moves to Offset ‘Systemically Important’ Tag

GE Capital announced that a newly formed finance subsidiary, GE International Funding, has commenced private offers to exchange the issuer’s new notes for outstanding debt securities.

In April, General Electric announced a plan to reduce the size of its financial services businesses through the sale of most of the assets of GE Capital and to focus on continued investment and growth in GE’s industrial businesses. That announcement also noted that the GE Capital’s exit plan would involve a merger of GECC with and into GE to assure compliance with debt covenants as GECC exits the assets planned for disposition.

The merger is part of a reorganization of GECC’s businesses pursuant to which GE will also separate GECC’s international and U.S. operations, and GECC’s international operations will be consolidated under a new international holding company (GE Capital International Holdings), which will have a separate capital structure and be separately supervised.

The reorganization and exchange offers are intended, among other things, to establish an international holding company (GE Capital International Holdings) with an efficient and simplified capital structure that is satisfactory to GECC’s regulators, a key step in terminating the nonbank systemically important financial institution designation for GECC. In addition, the Exchange Offers seek to align the liabilities of GE Capital International Holdings to its assets from a maturity profile and liquidity standpoint, taking into consideration asset sales, and where appropriate shortening the maturity profile of targeted liabilities.

The issuer is a newly formed finance subsidiary of GECC, but upon the completion of the Reorganization, the issuer will become a subsidiary of GE Capital International Holdings. The New Notes will be fully, irrevocably and unconditionally guaranteed by GE, and the Old Notes are fully, irrevocably and unconditionally guaranteed by GE and will subsequently be assumed by GE in connection with the merger. The New Notes initially will also be guaranteed by GECC, and upon completion of the Reorganization, GE Capital International Holdings will assume the guarantee by GECC. The Exchange Offers are not conditioned on the completion of the Reorganization.

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