General Electric Co. plans to buy back as much as $5 billion ofbonds as the manufacturer seeks to cut its debt load as part of itsturnaround. The repurchase will cover up to $2.5 billion of dollardebt and the equivalent of $2.5 billion (2.28 billion euros) ofeuro-denominated notes, GE said in a statement Thursday. Thecompany said it wouldn't expand the size of the buyback plan.

Reducing debt is a cornerstone of CEO Larry Culp's attempt tooverhaul GE after one of the worst slumps in the company's 127-yearhistory. Since taking the helm last year, Culp has been pruningoperations to focus on making jet engines, power equipment, andmedical scanners while tackling more than $100 billion inborrowing.

"We're doing what we said we'd do," Culp said at a MorganStanley conference Thursday. "The reset year thus far here in earlySeptember is playing out fundamentally in line with what weanticipated, but we know we have a lot more to do both with respectto the balance sheet and the way we run the business."

The shares fell 1.1 percent, to $9.26, at the close in New York.GE has advanced 27 percent this year, compared with a 22 percentgain for a Standard & Poor's index of U.S. industrialcompanies. GE lost more than $200 billion in market value duringthe two-year period ending December 31, 2018, as profits droppedamid flagging demand for gas turbines and high costs.

The company said Wednesday it would raise about $2.7 billion bycutting its holdings in oil-services company Baker Hughes to aminority stake. That sets GE up for about $38 billion in assetsales, including the pending $21.4 billion sale of GE'sbiopharmaceutical business to Danaher Corp., Culp said.

GE reiterated Thursday that it seeks to reduce the debt load atthe industrial businesses to under 2.5 times a measure of earningsand is evaluating other options to cut debt, including pensionfunding and intercompany debt repayment between GE and itsfinancial services unit.

That means GE will have to erase about $25 billion of debt atthe industrial businesses, from $51 billion at the end of thesecond quarter, Culp said. Improving profits at the company'sbusinesses will take more time, he said.

"With respect to running the businesses, this is what takeslonger, both in terms of how we operate and having that translateinto results," Culp said.

Rate Impact

The drop in interest rates will add about $7 billion to GE'spension obligations and deliver a hit to insurance-reserveassumptions of "somewhere south" of $1.5 billion, Culp said. GEmade contributions of $6 billion to the pension fund last year thatcovers the company through next year, he said.

GE shares last month posted their biggest one-day plunge in 11years after financial investigator Harry Markopolos skewered thecompany's accounting. Markopolos, best known for blowing thewhistle on Bernie Madoff, accused GE of fraudover the handling of its insurance and oil businesses and said"impending losses will destroy GE's balance sheet."

The Boston-based company called the claims meritless, with Culpcriticizing the report as "market manipulation, pure and simple." Anumber of Wall Street analysts and some prominent investors came toGE's defense as well.

GE is being more transparent about its financial situation to"demystify it as much as we humanly can," Culp said.

The company said in March that it was looking at buying backdebt, and said in January that it doesn't expect to issue new debtuntil 2021. GE is one of the 10 biggest issuers of corporate bondsin the Bloomberg Barclays US Corporate Bond index outside of thefinancial sector.

The buyback offer expires on October 9. Holders that submittheir bonds by September 25 are eligible to receive an earlyparticipation premium.

The dollar-denominated bonds that can be bought back maturebetween 2022 and 2044, while the euro-denominated notes are duebetween 2022 and 2037. The company said $8 billion of dollar debtand 10.5 billion euros of euro-denominated debt is eligible for theoffer.

JPMorgan Chase & Co., Bank of America Corp., and GoldmanSachs Group Inc. are managing the buyback. D.F. King & Co. isserving as the information and tender agent.

—Withassistance from Brendan Case, Molly Smith, and TonyRobinson.

Copyright 2019 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.