Troubled automaker starts repaying US
DETROIT - General Motors Co. made the first payment on its giant installment loans from the United States and Canadian governments yesterday, sending $1 billion to the US Treasury and $192 million to Canada.
The company plans to repay both governments in full by the end of June, but chairman and acting chief executive Ed Whitacre Jr. said that repayment is contingent on no downturns in the economy or GM’s business.
GM owes the US government a total of $52 billion, with $6.7 billion of that in loans. At least part of the remaining $45.3 billion could be repaid when GM sells stock, perhaps late next year. The government owns about 61 percent of the troubled Detroit automaker in exchange for putting up money that is keeping the company afloat. GM also owes $1.4 billion in loans to the Canadian and Ontario governments.
Whitacre on Tuesday committed to repaying the loans by the end of June. His predecessor as chief executive, Fritz Henderson, disclosed in November plans to start making eight quarterly payments in December.
GM posted a $1.2 billion loss for the third quarter but said it was generating cash and could commit to the repayment. Ray Young, finance chief at the time, said the government placed $16.4 billion of GM’s money into a contingency fund in case sales worsened or other problems arose. Now, GM doesn’t need the contingency money and can repay a portion to the government, he said.
Whitacre said the repayments would come from a combination of government dollars and cash generated by the company. On Tuesday, he said he didn’t know how much money a public stock offering would bring.
A Treasury spokesman would not comment other than to confirm receipt of the payment.