Related Party Transactions

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Our most significant related party transactions are transactions that we have entered into with our members and their affiliates. GE and its affiliates have provided and continue to provide a variety of services to us. We also enter into certain transactions with Baker Hughes as provided in the BHH LLC Agreement. On September 16, 2019, GE's ownership in us was reduced from approximately 50.3% to approximately 36.8% (the Trigger Date). At September 30, 2020, GE's interest in us was 33.8% and Baker Hughes' interest in us was 66.2%.

During 2018 and 2019, we entered into a Master Agreement and a series of related ancillary agreements with GE and Baker Hughes (collectively, the Master Agreement Framework) designed to solidify the commercial and technological collaborations between Baker Hughes and GE and to facilitate our transition from operating as a controlled company. In particular, the Master Agreement Framework contemplated long-term agreements between Baker Hughes, BHH LLC and GE on technology, fulfillment and other key areas providing greater clarity to customers, employees and shareholders.

Also in 2019, we entered into an Omnibus Agreement, a general framework agreement that addresses certain outstanding matters under existing long-term commercial agreements between us and GE. The Omnibus Agreement contains provisions regarding, among other things, (i) the repayment of certain outstanding amounts mutually owed by the parties, (ii) certain employee and assets transfers (including the allocation of costs and expenses associated therewith), and (iii) certain matters related to three international joint ventures.

RELATED PARTY TRANSACTIONS WITH GE

On July 3, 2017, we executed a promissory note with GE (which was amended and restated on July 31, 2019 in connection with the entry into the Omnibus Agreement referenced above) that represents certain cash that we are holding on GE's behalf due to the restricted nature of the cash. The restriction arises as the majority of the cash cannot be released, transferred or otherwise converted into a non-restricted market currency due to the lack of market liquidity, capital controls or similar monetary or exchange limitations by a government entity of the jurisdiction in which such cash is situated. There is no maturity date on the promissory note, but we remain obligated to repay GE, therefore, this obligation is reflected as short-term borrowings. As of September 30, 2020, of the $111 million due to GE, $85 million was held in the form of cash and $26 million was held in the form of investment securities. As of December 31, 2019, of the $273 million due to GE, $162 million was held in the form of cash and $111 million was held in the form of investment securities. A corresponding liability is reported in short-term debt in the condensed consolidated statements of financial position.

We sold products and services to GE and its affiliates for $46 million and $71 million during the three months ended September 30, 2020 and 2019, respectively, and $150 million and $260 million during the nine months ended September 30, 2020 and 2019, respectively. Purchases from GE and its affiliates were $384 million and $336 million during the three months ended September 30, 2020 and 2019, respectively, and $993 million and $1,215 million during the nine months ended September 30, 2020 and 2019, respectively.

The Company has $408 million and $536 million of accounts payable at September 30, 2020 and December 31, 2019, respectively, for goods and services provided by GE in the ordinary course of business. The Company has $526 million and $495 million of current receivables at September 30, 2020 and December 31, 2019, respectively, for goods and services provided to GE in the ordinary course of business. Additionally, the Company has $78 million and $75 million of current receivables at September 30, 2020 and December 31, 2019, respectively, from Baker Hughes.