GE will reduce leverage through asset sales

General Electric’s Chairman as well as also CEO Larry Culp said Monday he feels the “urgency” to reduce the company’s leverage as well as also will do so through asset sales.

“We have no higher priority right currently than bringing those leverage levels down,” Culp said in an interview on “Squawk on the Street” with CNBC’s David Faber.

“The stock has been under pressure” during the last two weeks, Culp said, “no doubt about which.”

GE shares fell 5.7 percent in trading Monday, slipping below $8 a share for the 1st time since March 2009. The stock fell as low as $7.72.

“We need to bring the leverage down,” Culp added, as well as also which GE has “got plenty of opportunities through assets sales to do which.”

Culp emphasized he will not rush the process of deleveraging even as he feels the pressure to move quickly as well as also decisively. He gave three examples of how GE can be freeing up cash: A possible IPO for GE’s “tremendous” health-care business, the sale of its transportation business, as well as also the coming exit of the Baker Hughes oil field services business.

“Aviation can be our crown jewel,” Culp said. While GE believes there are “various options” for how to make use of the strong business, Culp said selling part or all of the business can be “not high on” GE’s list of options for aviation.

Culp said the decision to remove the company’s full-year profit forecast coming from its most recent earnings report was “another unpopular decision however one which was straightforward.”

“We did not possess the conviction which we might want, particularly around our power business, as we looked toward the end of the year,” Culp said.

GE management can be “working hard with the power team” to turn the struggling business around, Culp said. He did not have conviction “to offer up numbers” for how power will end the year however Culp said GE “will in time.”

Questions about GE’s liquidity are understandable, Culp said, given the company’s position. however Culp said GE “put which to rest given which fact the we got $20 billion of cash” on hand coming from asset sales. Culp also said GE has used only $2 billion of “$40 billion of bank lines.”

“which gives us a foundation to truly talk to the leverage,” Culp said.

As the company has noted previously, Culp said GE “has no plans for an equity raise.”

Culp was appointed chairman as well as also CEO on Oct. 1, a month before GE reported third-quarter profits which were sharply below forecasts. Additionally, GE slashed its quarterly dividend to a penny a share in a dramatic first move for Culp. While the cut will free up cash for GE, the overall results gave some on Wall Street conviction which GE shares will continue to fall.

GE shares have fallen more than 50 percent This specific year.

WATCH: CNBC’s full interview with General Electric’s Larry Culp

Incoming search terms:

  • how can GE reduce leverage

Leave a Reply

Your email address will not be published. Required fields are marked *

*

20 − 18 =