General Electric Co. inked the first deal to move itself awayfrom banking -- by selling its private-equity-lending unit toCanada’s largest pension fund in a deal valued at about $12billion.

It's the first piece of GE Capital Corp., the industrialconglomerate's finance arm, that the parent company has sold sinceannouncing plans to exit the business in April. Investors offeredthe company modest applause for its deal, sending the stock up 0.3%on a day when broader markets were down.

GE Capital was at the epicenter of the storm after LehmanBrothers Holdings Inc. declared bankruptcy in September 2008. GEultimately became one of the largest recipients of the federalgovernment's lifelines during the financial crisis.

Here's a look at how GE's business has changed since then:

2008: To survive the financial crisis, GE frozeits dividend, suspended its share-buyback program, scaled back itsfinance unit and made moves to reduce its reliance on short-termborrowing. It raised $15 billion by selling $12 billion in newshares and offering $3 billion of preferred stock to WarrenBuffett‘s Berkshire Hathaway Inc.

2009: Mr. Immelt continued to scale back thecompany, announcing a deal with Comcast, which would give Comcastmajority control of NBC Universal.

2010: GE made several big (and what now looklike ill-timed) bets on oil, including the announcement of a $3billion deal to buy Dallas-based oil-and-gas equipment makerDresser Inc. and a $1.25 billion deal to acquire U.K.’s WellstreamHoldings PLC, a bet on deep-water oil exploration.

2011: GE paid back Mr. Buffett and continuedits acquisitions of oil and gas assets, announcing a deal to buythe well-support division of John Wood PLC, which makes submersibleelectric pumps that help extract oil, for $2.8 billion.

2013: Mr. Immelt paid $3.3 billion for LufkinIndustries Inc., a drilling-equipment maker positioned to benefitfrom North American shale drilling. GE also acquired Italianaviation supplier Avio SpA for $4.3 billion.

The conglomerate raised $18.1 billion by selling off itsremaining stake in NBC Universal and 30 Rockefeller Center toComcast Corp.

2014: GE sold off the electric toaster,self-cleaning ovens and other appliances it helped create toSweden-based Electrolux AB for $3.3 billion, but the appliancesstill hold the GE name. Mr. Immelt also inked a $17 billion deal tobuy Alstom‘s power-generation business, the company’s largestacquisition ever. The Alstom deal has not yet closed.

GE began the process of spinning off its consumer creditoperation into a new stand-alone business, Synchrony Financial,through an initial public offering.

2015: GE said earlier this year that it wouldsell off $100 billion in assets in 2015.

In late 2014, GE agreed to sell its Budapest Bank unit toHungary’s government for roughly $3.3 billion (It counts this dealin the $100 billion.). In March, GE sold the consumer-lendingbusiness of GE Capital in Australia and New Zealand to an investorgroup for roughly $6.3 billion. GE has also inked deals to sellroughly $26.5 billion in real estate to Blackstone Group LP.

That leaves the company with roughly $45 billion in assets leftto sell this year by its own estimations. Earlier this month, theWSJ said that GE kicked off the auction for another large chunk ofGE Capital -- U.S. portions of its dealer financing and corporatefinance businesses, which provide loans for equipment purchases andtruck vendors.

Meanwhile, as the WSJ's Ted Mann reported Tuesday morning, it'sdifficult to value exactly what's left of GE Capital as theindustrial conglomerate uses several different measurements of itssize and assets.

After the credit market turbulence, however, GE had difficultiesin borrowing short-term debt. GE had a $50 million line of creditthat they thought they would never need but were confident thatwould definitely get it when requested. Things however, changeddramatically during the financial crisis in 2008. GE couldn’t pullits line of credit because it would render the bank that grantedthe line bankrupt and cause a series of cascade bankruptcies afterthat. GE learned a painful lesson that a line of credit is not asgood as cash.

What GE experienced illustrates how important working capitalmanagement to the firms’ financial position and risk.

In order to meet their working capital needs, companies have theoption to hold cash or hold on to a line of credit.

Discuss:

questions to answer

1. Evaluate whether you would recommend companies to hold cash orto rely on the line of credit. Why or why not.

2. Would you make different recommendations for different types offirms?

3. What implications does liquidity management have on yourrecommendation?

4. Find news examples and evidences to support your position.