GM's $4.5B in notes will cut high-interest debt

DETROIT (AP) — General Motors says it will sell $4.5 billion in bonds to reduce debts owed to union-run trusts that pay retiree health care bills for U.S. and Canadian retirees.

The company says it will spend $3.2 billion to buy 120 million shares of GM preferred stock from a U.S. trust. The company is paying a 9 percent annual dividend on the stock. It will use $1.2 billion more to pay off 7 percent notes now held by the Canadian trust.

GM says the moves should add 11 cents per share to next year's earnings.

GM says one-third of the new bonds have a 3.5 percent interest rate, while another third are at 4.875 percent. The final third has a 6.25 percent rate. The notes mature in five, 10 and 30 years.

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