• Nov 16, 2009
General Motors will announce later today plans to repay the U.S. government some $6.7 billion in loans ahead of its initial due date of July 2015. The payments are expected to begin as early as next month, with $1 billion paid each quarter until the full sum is paid – although that doesn't cover the total $50 billion the taxpayers have "invested" in the automaker after it declared bankruptcy earlier this year.

However, as the Washington Post points out, the amount the government will get back from GM depends on the value of the General's stock. With $6.7 billion in debt, $2.1 billion preferred stock and a 61 percent stake in the automaker, the $50 billion total is a long way off from being paid in full. And when GM reports its financial results tomorrow, it's not expected to show a profit, although the overall picture could be slightly better than anticipated.

[Sources: Washington Post, Detroit News | Image: Bill Pugliano/Getty]


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  • 53 Comments
      • 5 Years Ago
      Well... on the product front at least we are seeing the change. Weren't we all just commenting on how nice the new Regal is the other day? I could list model after model that GM has improved in the past year. I think there's reason to be optimistic. And I'm no GM fan after have a negative experience with the only GM vehicle I ever purchased. (A '95 K-1500 Silverado that was a complete lemon. I doubt I'll be a customer again.)

      As a taxpayer I applaud any signs of progress--which this is. I think every North American has an interest here and we should hope they pull off this turn around.
      • 5 Years Ago
      so.. 6,7 bilions out of 50 bilions. When will they start paying all the $$$ gov. had been spending on thier asses??
        • 5 Years Ago
        Because only a portion of the $50B ($6.7B, to be exact) is actually in loans.

        The rest is in EQUITY in the company. Which means that the Government will be paid back when they sell their stock, hopefully at a profit.

        So, after the $6.7B is paid down, the question will not be "when does GM pay the rest of the money back?".

        Instead, it'll be, "when can the government sell its shares at a profit?"
        • 5 Years Ago
        @ inline6:
        I was wondering if anyone was going to show that they actually know something about the situation. I'm no GM fan but this is good news. Some people are never happy I guess. Probably Republicans.
      • 5 Years Ago
      be a patriot, don't buy GM, and buy a Ford.

      Better yet, buy a Toyota or Honda.
        • 5 Years Ago
        I refuse to buy GM. Im all about Ford now.. Funny thing is, now that we have a globel economy Toyota and Honda are providing more and more jobs in America and American Car companies are providing less and less. Also I find it funny that my SVT Focus was designed in Germany and made in Mexico with German parts. The only thing American about my Focus is the German made Ford badge (it literally says made in Germany). My dads Honda Accord on the other hand is made in the US using many US and Canadian parts.
        • 5 Years Ago
        Final assembly does not equal content. Many cars built in Canada and Mexico may in fact have more US content than a car assembled in the US. You have to read the content on the window sticker.
      • 5 Years Ago
      Wow that's quicker than I expected
      • 5 Years Ago
      I'd say that things are looking up for GM and the American taxpayers who own the majority of the company. Looks very promising that we will not only get our money back but also make a profit, just as we did back when Lee Iaccoca was running Chrysler.
      My only concern is who may buy those shares once they hit the market.
      • 5 Years Ago
      Phew, Good news...
        • 5 Years Ago
        Nah, the argument was never about whether or not GM would be able to pay back the billions of dollars that they were loaned to, it was about why should they get bailed out? All of this money never created any new jobs, but all it did was keep the existing jobs in an industry that has already established itself and is somewhat stable. We could have given all of that money to an upcoming industry or even one that has not been fully established yet. Therefore, think about this for a minute and then see if it was still the smart thing.
        • 5 Years Ago
        I agree, this is good news.

        I'm sure the haters and trolls will come out, but most of them thought that the government (and us as a people), weren't ever going to get even a single cent back. Considering GM is starting to pay back their loans over 5 years early, there's the additional bonus of opportunity cost. After all, assuming a minimum IRR of 5%, the OC of the funds paid back by 2015 should be substantial.
        • 5 Years Ago
        Argh. Posting fail.
        • 5 Years Ago
        So how do you declare bankruptcy, borrow money to keep going, lose $1.2 billion a quarter and start paying back your loan?

        http://www.msnbc.msn.com/id/33961851/ns/business-autos/

        Are they making a loan payment with borrowed money? Something about this doesn't add up.
        • 5 Years Ago
        @ Polly Prissy Pants: "So how do you declare bankruptcy, borrow money to keep going, lose $1.2 billion a quarter and start paying back your loan? ... Something about this doesn't add up."

        Not only that, but the Fed just subsidized the biggest sales month of the year with the Cash-4-Clunkerz! debacle. Can you imagine what the numbers would really look like if GM had been responsible for plunking down ~3-4k per deal of their own (err, borrowed) cash instead of we - the taxpayers - having done it?

        Oh, I forgot, we're in HopeNChangeNBaitNSwitch fantasyland.
        • 5 Years Ago
        They should just take it out of their marketing budget. Since this is for the most part just really good PR. The government money is has got to be their lowest interest credit line so paying it back early makes no financial sense.
        • 5 Years Ago
        @ Polly: They are paying this back with other funds they've been loaned by the government-- that's how they're doing it. Reminds me of people I know that pay their bills with their credit cards.
      • 5 Years Ago
      oh I wasn't going to comment but it can't be helped. Call me a hater if you must.

      Yes, lets get all giddy over the early payback. Ok, done jumping about? Now do not misread this as a "turnaround" or a great management feat. Instead, realize that this is merely a bargaining chip that will be used with the government to alleviate the pay caps for the top execs at the expense of shareholders and moving the company forward (i.e. using that billion per quarter to improve the business so that they can actually afford to pay back the full $50Bil).

      Never fail to recognize that the people who run public companies aren't running them for the benefit of shareholders nor employees. They are highly motivated (and indeed incented) to line their pockets under the guise of "managing". The top execs know that this is not their company nor their money at stake. What monies of theirs that is at stake are pay and bonuses. So it is that very item that motivates them no matter what it means to the underlying company. So folks, the more things change...the more they stay the same.
        • 5 Years Ago
        Well, the guy is right actually and is not Trolling.

        The $6.7B is the loan portion of the aid package which has covenants on it capping executive pay. Check out the comments from Lutz recently complaining about pay caps. So, they are paying it back to get rid of those caps. There is always an ulterior motive.
        • 5 Years Ago
        Not many people have jobs that don't have the sole motivation of financial gain. They are paying back early and that is good for everyone. Even people that want nothing but for them to fail so they can complain some more. They bitch about lending the money, and bitch about getting it back. Big surprise. If you have nothing constructive to add to the conversation then don't comment. You're just coming off as a Troll.
      • 5 Years Ago
      I will take six please.
      • 5 Years Ago
      It's a long ways away, but it's a start...

      ...and I think a big fat middle finger is in order for all those idiots that weren't willing to give them the money to stay in business which would have pretty much guaranteed that this extremely severe recession would have been even worse.
        • 5 Years Ago
        Considering this is money owed by the old GM that, from a legal perspective, didn't even have to be paid back yes, this is good PR to the naysayers.
      • 5 Years Ago
      GM must have mob connections, because none of us can fathom where this money came from. But, it looks like people will still be calling them Government Motors for a while.
      • 5 Years Ago
      GM is losing a billion this last quarter. That is the bottom line. They are paying the taxpayer off with money from the taxpayer. The money will run out soon. Don't you see? Are you all blind? This is horrible for the economy. When bad companies fail, failure is the cure for the economic woes. It allows us to reset. Allowing GM to fail was essential. Now, we say those jobs are "saved" but they are really just receiving welfare from a company that continues to fail.
        • 5 Years Ago
        quote from 2xtrbo:
        - "They are paying the taxpayer off with money from the taxpayer." -

        So what? How would you prefer they pay it off?

        In my mind, the very fact that they paid back the borrowed funds with the borrowed funds is a good thing, it means that GM was able to stay financially well enough that the borrowed funds weren't spent.

        As another poster stated, if I borrow $20 from you and then pay you back the same $20 the next day, what's the difference. You got your money back, isn't that what you wanted? Or would you really prefer to be paid back with money from another source completely?
        • 5 Years Ago
        GM also lost a huge amount of money over the past few years. Look over these earnings results since Q1 08 and tell me how a small loss in Q3 09 isn't significantly better.

        It also goes much deeper than just the bottom line as well. Despite a loss in the 3rd quarter, GM has made large strides towards paying off their debts which will be nothing but good for the future. Additionally, once GM emerged from their BK, they cut their total debt load from $95B to roughly $17B. Now, more of their money can go towards paying off those remaining debts rather than going towards interest as was the case previously.

        Q1 08 - $3.3B loss
        Q2 08 - $15.5B loss
        Q3 08 - $2.5B loss
        Q4 08 - $9.6B loss
        Q1 09 - $6.0B loss
        Q2 09 - no record
        Q3 09 - $1.2B loss

        Yes, I agree that a loss is a loss, however, did you really expect them to go from losing Billions per quarter to suddenly earning money? The huge losses have been stemmed and GM is in a much, much better financial position that they were previously. I fail to see how that's such a difficult concept to understand.
      • 5 Years Ago
      Great news...and I love the picture
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