"These actions will bring down our leverage by $11 billion by reducing debt and improving our pension funding position," said Chris Liddell, GM vice chairman and chief financial officer.
Combined, the actions are expected to reduce interest and dividend costs by $500 million a year, GM said. The plan is contingent on GM's initial public offering, planned for next month.
The company has also secured a $5 billion, five-year line of credit from its lenders to provide backup liquidity, it said.
On Tuesday, Ford Motor (F) said it reduced its indebtedness during the quarter, paying down its revolving credit line by $2 billion and prepaying its $3.6 billion debt obligation to the UAW retiree health care trust.
The actions reduced the Dearborn, Mich., company's debt to $26.4 billion as of Sept. 30. Ford officials said they expect the company to have net-zero debt by year's end, fully a year ahead of schedule.