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GM withdraws bid for $14.4b loan

General Motors vice president Ed Welburn shows Hilda Solis, Labor secretary, the Chevrolet Volt in Washington yesterday. General Motors vice president Ed Welburn shows Hilda Solis, Labor secretary, the Chevrolet Volt in Washington yesterday. (Chevrolet via Reuters)
By New York Times
January 28, 2011

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DETROIT — General Motors said that it was withdrawing its application to borrow $14.4 billion from a pool of federal money intended to help automakers build more fuel-efficient vehicles.

GM, whose request had been pending with the Department of Energy for 15 months, said the decision was based on improved cash reserves and a desire to avoid more debt.

The company was profitable in 2010 and had $33.5 billion in cash and marketable securities as of Sept. 30 — much of it the result of federal loans related to its 2009 bankruptcy filing — up from $22.8 billion a year ago.

“This decision is based on our confidence in GM’s overall progress and strong, global business performance,’’ Christopher Liddell, GM’s chief financial officer, said in a statement. “Withdrawing our DOE loan application is consistent with our goal to carry minimal debt on our balance sheet.’’

GM was unlikely to have received anything close to the full amount that it had originally sought.

It would have been required to use the money to retool US plants to make vehicles and parts with improved fuel economy.

Congress created the $25 billion fund in 2008, and the Department of Energy has lent about $8.5 billion of it so far.

The Ford Motor Co. received $5.9 billion — about half the amount it requested — with smaller amounts going to Nissan, Tesla, and Fisker.

The money is unrelated to the federal government’s loans that GM and Chrysler received in 2008 and 2009 to prevent their collapse.