GM makes first $1 billion payment to feds, Canada

December 18, 2009 http://detnews.com/article/20091218/AUTO01/912180454

GM makes first $1 billion payment to feds, Canada

DAVID SHEPARDSON
Detroit News Washington Bureau

Washington — General Motors made its first $1 billion payment toward its $6.7 billion in outstanding U.S. government loans today, 13 days ahead of schedule.

GM’s chairman and CEO Edward Whitacre Jr. also announced that GM had paid $192 million, the company’s first installment on its Canadian loans.

"We are grateful for the support the governments have provided us. We look forward to continuing repayments through June 2010, at which time the balances will be paid in full, assuming no downturn in the economy or business," Whitacre said in a statement released by GM.

In a statement, the Treasury Department confirmed receipt of the funds.

The Treasury Department defended its $81 billion auto industry bailout, saying it "prevented a significant disruption of the American automotive industry, which would have posed a systemic risk to financial market stability and caused broader economic harm. After emerging from bankruptcy in July, General Motors is on a path to stability and poised to return additional taxpayer investments."

The payments announced Friday won’t make U.S. taxpayers whole for their $50 billion in loans to GM, nor the Canadians.

The U.S Treasury swapped about $43 billion of the loans for a 60.8 percent equity stake in GM.

Canadian federal and provincial governments hold an 11.7 percent equity stake in GM in exchange for most of their $10.5 billion in loans.

The Treasury Department estimates that it has lost a total of $30.48 billion of its $81 billion investment in the auto industry. Based on the value of GM debt, the government has lost about $25 billion of its investment in GM.

GM announced in November it would make the first quarterly payment on Dec. 31.

The Detroit automaker also said it would make $200 million quarterly payments to the Canadian national and Ontario provincial governments against its $1.4 billion debt.

The schedule means that at a minimum, GM will have repaid about half of its debt before it goes public.

In an interview last month, the Treasury Department’s top auto adviser, Ron Bloom, praised GM’s early repayment but said the automaker still had a lot of work to do.

"The early signs are positive. That’s obviously a good thing, but I don’t want to over-read it. Nobody’s uncorking Champagne," Bloom said.

GM had been required to repay the loans by July 2015.

GM is modestly ahead of its financial plan, in part because it emerged from bankruptcy after only 40 days — shorter than the 60-90 days predicted by the company and the Obama auto task force.

The automaker will use unspent taxpayer loans to repay the government. When GM exited bankruptcy through the sale of most of its assets to a new company, the U.S. Treasury gave the new company $16.4 billion in exit financing that was placed in "escrow" or in what GM refers to as a "restricted cash account."

GM has spent $3 billion, largely to cover obligations to its former parts unit Delphi, leaving $13.4 billion, which means its outstanding government loans could eat up most of the remaining funds.

Share
Seniority Lists
Recent Posts!
Bargaining Committee

Chairman
Mike Herron
President
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Committeepersons
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

President
Tim Stannard
Chairman
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Guide
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts
GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Neil Osborne
Retiree Chair
Mike Martinez

Get Text Alerts



asdasdsd

*Standard text messaging rates may apply from your carrier