• Mar 26th 2010 at 8:30AM
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Last December General Motors began repaying its debt to the U.S. government by making a $1 billion payment to its U.S. debtors and another $192 million to Canada. Company CEO Ed Whitacre promised that the payments would keep coming every quarter until the loan was paid off in June, 2010, and with the first quarter of 2010 coming to a close, The General is about due for another payment. Keeping with Big Ed's word, the company issued a statement on Thursday that the next installment of another billion dollars will be paid on March 31.

The brief statement is attributed to Whitacre and promises another $1 billion in cold, hard cash to the U.S. government and an additional $192 million to Canada. In the statement Whitacre sounds confident that the loans will soon be paid in full, adding "GM has every confidence that the remainder of the loans will be paid in full by June 2010; five years ahead of schedule."

On April 1 The General will have shaved $2 billion off its debts with another $4.7 billion to go. We're no math experts, but we're guessing $1 billion per quarter is going to have to be substantially increased over the next three months to repay its debt in full by June 30. But with about $40 billion in the bank, GM will likely have the cash on hand to pay off Uncle Sam by the time Summer is in full swing.

Once GM does pay off its $6.7 billion loan, the feds will still own 61% of the Detroit, MI-based automaker, but with some analysts expecting GM to take its stocks public in the next few months, the automaker could soon be a fully public company again. We're sure GM executives will be very happy when that happens. Hit the jump to read GM's brief press release.

[Source: Detroit Free Press | Image: Bill Pugliano/Getty]
Show full PR text
In keeping with our commitments to the U.S. and Canadian and Ontario taxpayers, GM plans to make its second quarterly loan payment of approximately $1 billion to the U.S. Treasury and $192 million (USD) to Export Development Canada on March 31.

While we have more work to do, GM is building high-quality, award-winning vehicles, our direction is clear and our plan is working. Given the progress the company is making, GM has every confidence that the remainder of the loans will be paid in full by June 2010; five years ahead of schedule.

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    • 1 Second Ago
      • 5 Years Ago
      they had some guys from the Wall Street journals on Bloomberg and the government is going to turn a $10 billion profit over 3 years, when they sell it off over the next 18 months. And will have saved nearly $900million by not having to pay benefits to unemployed workers.
      • 5 Years Ago
      I'd actually forgotten that Canada was in on this too. Hurray for getting some of our money back! Keep up the good work GM. Your cars are appealing now too!
      • 5 Years Ago
      @tankd0g (again)

      You're assuming two things: one, that the Chinese would operate their "failed bits bought at auction" no more competently than their previous owner and two, that they wouldn't take all the GM intellectual property and leverage it out.

      If the Chinese bought GM's production assets, they could operate them union-free, pension-free, and legacy-free. You don't think that would have given them an advantage? And in the meantime the US economy could have seen outright devastation.
      • 5 Years Ago
      This is unexpected, but good news. Good on you, GM.
      • 5 Years Ago
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      • 5 Years Ago
      I will still call them Gov't Motors. GM isn't repaying their loan, just parts of it. The GAO has stated that they will probably never see the TARP money that they loaned to GM and Chrysler.
      • 5 Years Ago
      Must be nice that you can pay back $6 billion of $50+ billion given to you and then call it even.
        • 5 Years Ago
        +1 Exactly! This whole thing is a joke.
        • 5 Years Ago
        Of course you leave out one small detail that the money wasn't given to them like the banks got. The government (aka taxpayers) bought 60% of the company through bankruptcy shafting most of the shareholders in the process. In the long run the government is going to make out well on their investmet, once GM goes public.

        GM and Ford have about equal cost structures, but Ford has a lot more debt than new GM and almost the same market share as GM right now. If Ford is making money, only a fool would think GM isn't making money with much lower debt.
        • 5 Years Ago
        I will assume you can read because you are on this site, although maybe the secretary of your local teabagger group is reading this to you.


        There was a loan component and an equity component by the government. The loan is being paid back on an ongoing basis. The equity will be (mostly, but likely not fully) paid back upon the IPO of GM.

        Unlike the piss poorly conceived bank bailout by your man George "The Pet Goat" Bush, this was the best mechanism for both saving GM and hoping to recover most if not all of the auto bailout.
        • 5 Years Ago
        Bman: Does the name in your moniker stand for BLIND?

        Think of what it would have cost the US government and economy, had they allowed GM & Chrysler to fold.

        Not just billions in tax revenue, but billions more in unemployment checks. Plus the cost of setting up soup kitchens all across the land.

        Maybe you'd prefer if that $40 or so billion that GM has on hand, was in a bank in Tokyo.

        • 5 Years Ago
        I was not opposed to the bailouts. It would have been a disaster if they didn't. However, with that, you have to accept that they were a failed company that was bailed out. Unless they actually pay everything back, not just 10% of the principal, it is fair game to call them Government Motors and for us to complain when they claim that they have "paid it back."
        • 5 Years Ago

        You are forgetting one component- the cash escrow account. They are taking money from the government cash escrow account (that was set aside as part of the bailout for emergency purposes and needs government approval to be used by the company) and using it to repay the loan. Money is just going from one government bucket to another.

        It is good news that GM believes that it is stable enough that it will not need a government cash infusion in the future. However, GM has yet to turn a profit. They have not made any corporate income are not paying back a loan from their income (like a typical person back loans from his/her income). When GM goes public, it will need to have a total market cap significantly higher than the company has ever had in its history for the government to make its money back (which would take a miracle to happen).

        I supported the bailout because it prevented a major industrial collapse that would have rippled through a troubled economy. However, this is a government bailout of a failed company that the US government will lose billions of dollars on.
      • 5 Years Ago
      The shell game continues!
        • 5 Years Ago
        Shell game indeed. Squealer declares the loan paid off so it must be paid off. Come on people try to pay attention to what's happening here. You have exactly the government you deserve if you'll accept the premise that this loan will be paid off in June.
      • 5 Years Ago
      They're being very quick to pay this off because the executives can't get their bonuses until the loan is paid off
      • 5 Years Ago
      I hope those whining about "Government Motors" will finally shut up.
        • 5 Years Ago
        Paying this loan off so fast only makes sense if they are planning on doing their IPO in the Summer. The whole idea is that they can ride the crest of the good PR to boost their stock price.

        Personally I am hoping that the Canadian Government hangs onto their shares for a little while. With the turnaround in the economy and GM's future looking up they could potentially get their money back. The American Government will likely dump theirs ASAP just to shut up the commentators on Farce News. So one way or another the American Government will never be able to recoup anywhere near what they spent to bail out GM because as usual politics will get in the way.

        The Canadian Government would actually have more clout than they have now by remaining a major share holder once the American Government's huge chunk has been split up into a million different pieces.
        • 5 Years Ago
        Hey kids! Remember the bank bailouts?

        You know, that nearly TRILLION dollars that went to corrupt banking fatcats?

        No? You don't remember?

        It was that really big-ticket news item before MJ's death, Tiger's infidelity, and the Winter Olympics.

        Where's the outrage in whether or not we'll get that money back?

        I guess that the automakers just happen to be a convenient scapegoat. Oh well.
        • 5 Years Ago
        Can we start calling it a 'loan' again? They're sure treating it like one.
        • 5 Years Ago
        Those are very good points Judy. I don't think the US will sell their stock all at once for fear of a price collapse. I suspect they'll want to maintain some leverage for a time as well. I wouldn't be surprised to see it take a few years for the government to fully divest itself of GM shares.
        • 5 Years Ago
        True. I guess they like whining. It is like a hobby for such persons.
        • 5 Years Ago
        Based on Market share, debt restructuring and market cap of competitors (Ford, Toyota) - the IPO should bring the US govt. about 35 - 40 billion.

        So the govt bailing out GM will probably cost about 5 - 10 billion in the end.
        • 5 Years Ago
        It's not Government Motors, it's Gub'ment Motors!
        • 5 Years Ago
        Would you like me to go back and add up all the money the government gave GM??? Far more that the $6.7 Billion they are paying back!!!

        Not to mention all the share holders, bond holders, vehicle owners, etc. that were screwed over in the backruptcy "trial".
        • 5 Years Ago
        Yeah, because they didn't screw all their previous creditors to achieve this or anything.
        • 5 Years Ago
        GM was given US$49.4 billion by the federal government in 2 separate transactions. The first was $19.4B that was never repaid and was left with the old company that is still proceeding through bankruptcy.

        GM has no intention of ever repaying that $19.4B. Its gone. The feds will not even get the 10% settlement that commercial bondholders will receive.

        $23.3B was converted into a 61% equity stake in the new GM that purchased the assets of the old GM out of bankruptcy.

        $6.7B remained as a loan with the new GM that will require repayment.

        So the short answer is that until the government gets their full $49.4B (plus interest as agreed), GM will always stand for Government Motors.
        • 5 Years Ago
        There are way too many people on here pissed off that the loan isn't being paid back all at once. Did you pay off your home loan all at once? Did you pay off your car loan all at once? What about your student loans? Second mortgage? Business loan?

        How are so many people confused by how a loan works?
        • 5 Years Ago
        You would think so, but they won't.

        They rather have had a pillar of US manufacturing collapse than lending them money for about a years time. It's scary how short-term these people's thought-process is.
        • 5 Years Ago
        They are paying the loan with the money they got from us, not from any kind of real earnings. Face it, the loan will NEVER be paid off in full. These little moves are just to make the drones happy.
        • 5 Years Ago
        @UCJR..... no my friend, nobody remembers the Trillion dollar bank bailout, which was in fact utterly and completely a bailout. or the fact that the combined money loaned to GM and Chrysler amounts to like 1 or 2% of the money handed to wallstreet with no stings attached on how it was to be used and no expectation of payback. quite franky the bank bailout wasn't even that big a news item really, considering that the general public and our news media outlets would much rather rip and tear at the domestic auto industry than dare to cast any negative light on our cracked and crumbling financial foundations
      • 5 Years Ago
        • 5 Years Ago
        On the contrary ... Very Good!
      • 5 Years Ago
      This is good news, and if neo-GM can IPO high enough we just may get all the money back (which would be fantastic). I know they want to rush these repays so the mgmt can get their big payouts, but I hope someone is slapping the backs of their heads so they stay focused on product.
        • 5 Years Ago
        I think one of the reasons that they are pushing to replay these loans are quickly as possible is that they don't want to IPO until the loans are paid in full.

        Either way, I completely agree with them keeping an eye on the ball and making sure that product is king above all else.
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