• Apr 19th 2010 at 6:00PM
  • 77
According to The Detroit News, General Motors will announce that it is fully repaying the federal loans it received last summer from both the United States and Canadian governments. In total, General Motors will have paid back about $6.7 billion ($2 billion of which has already been returned) of the $50 billion it received from the U.S., the majority of which was recovered by acquiring a 61-percent share of the automaker.

For those keeping track of such things and assuming this report is accurate, GM will have paid the entire amount agreed upon with the U.S. Treasury a full two months earlier than anticipated. This accelerated schedule is said to be seen as good news by both the automaker and the federal government. We'd guess that this is also a sign that GM is likely still on track for an initial public offering sometime this year.

GM CEO Ed Whitacre is expected to make the announcement on Wednesday when he makes a speech at a GM plant in Kansas. Later that day, Whitacre will make his first appearance at Capitol Hill since taking over at the head of the company in January. For what it's worth, the automaker has also called a press conference on Wednesday that we'll be attending. Stay tuned.

[Source: Detroit News | Image: Bill Pugliano/Getty]


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    • 1 Second Ago
  • 77 Comments
      • 5 Years Ago
      The title should read, "GM to repay 13.4% of total loans provided by the government." The rest of that money is gone for good.
        • 5 Years Ago
        Even if the government somehow miraculously recovered it's $43 billion years down the line it'd be a losing proposition since money has time-value...meaning having your money tied up in some company for decades while waiting for it to grow in value means you're not investing it elsewhere, presumably in a less long-shot investment.
        To really "break even" it'd have to grow in value from a starting point of $43 billion at the same rate that an average equity investment would have grown (i.e. an index fund). So basically we're screwed.
        • 5 Years Ago
        The rest was converted to equity. They are thus marked as repaid. The question is will the government's equity ever be worth what its assumed value was when it was converted from debt. This does seem like it's going to take a lot of improvement before that can be possible (if not a miracle). It's not gone for good...yet.
        • 5 Years Ago
        It's hard to say what ROI will be achieved with the government's equity in the company. Unless GM goes chapter 11 (or chapter 7) before the government gets its money out, it's possible (albeit unlikely), that the government could get back it's full $43 billion. It's also possible that they could get more, though that's even more unlikely.

        The recent restructuring is promising, as is the product pipeline. With any luck, GM will take some of its free cash flow (like what it's currently using to pay off the loans), and maybe set up quarterly or annual stock buybacks on the government's shares.

        The situation is certainly better than Chrysler's....
        • 5 Years Ago
        I agree it's misleading to say it is repaid. That's why I said 'marked as repaid'. Either way, after this, 100% of their loans will be marked as repaid. This means that there's nothing left to repay. Even if GM wanted to pay more, there's no one to pay it to because the debt will be gone, replaced by equity.
        • 5 Years Ago
        It's probably not gone for good but it's probably a little misleading to say they've repaid their loan. The investment in the new GM wasn't really an investment. Call it whatever you want but in reality it was a loan and with any luck we'll get our money back some day.
        • 5 Years Ago
        LOL good one.
      • 5 Years Ago
      To be clear, GM is not paying this back from revenue.

      When the government put GM through bankrupcy, they loaned them money AND set aside a cash escrow account for GM to be able to tap into in case of another crisis. All this loan repayment entitles is GM taking money from the escrow account to cancel out the loan.

      GM is still losing money. They have have not turned a profit yet. However, cancelling out their backup fund means they have some level of confidence that they will become a viable business in the near future.

      Now, when they go public they will have to have a higher market cap (combined worth of all of the shares on the stockmarket) than they have ever had in the history of the company for the government to get its money back. Realistically that is not going to happen- the government is going to lose money (our tax dollars).

      However, it was the price we paid to prevent a major industry player from collapsing in the middle of a major recession- which would have put shock waves through the economy.
        • 5 Years Ago
        Sorry Wiggy, even if you don't like that source, it is an absolute fact that GM is paying the government loan from the government escrow account.

        With enough digging, I can also source WSJ, Fortune, etc. Even a GM fanboy site like GM-Volt.com admits it:

        "And yes, the money that GM is ‘repaying’ is coming out of that same government escrow account that was just set up."

        http://gm-volt.com/2009/11/16/op-ed-gm-reports-a-1-2-billion-loss-but-has-the-cash-to-see-volt-well-into-production-and-beyond/
        • 5 Years Ago
        NY Times:

        "Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy. The rest of that account will be used to cover fourth-quarter losses (including $2.8 billion pledged for the rescue of G.M.’s major parts supplier, Delphi), repay loans from the Canadian government, and possibly prop up the automaker’s shaky European operations. That escrow account is due to expire in June, at which time G.M. will repay what remains of the $6.7 billion from this week’s pledge — and then pocket the estimated $5.6 billion remainder. "

        http://www.nytimes.com/2009/11/23/opinion/23niedermeyer.html?_r=1&scp=3&sq=GM%20escrow&st=cse

        And sorry, a net loss is still "losing money." GM hasn't claimed an operating profit yet either.
      • 5 Years Ago
      GM = Good Management (when they're in a deep hole).

      Chrysler = Huh????
        • 5 Years Ago
        Quote::""GM = Good Management (when they're in a deep hole).
        Chrysler = Huh????""



        B.S.

        GM's curent management team had little to do with the very successful vehicles GM is now selling (e.g. the Equinox).

        FIAT by all accounts is doing a good job getting Chrysler to turn around.

        The rotten management of Chrysler under Daimler and Cerebus are responsible for their current state, not FIAT.

        And Chrysler broke even in Q1 just like GM, with lower levels of sales.

        • 5 Years Ago
        I'm more of a Ford fan, but I'm very glad that Ford's domestic rival, GM is well enough to pay back the government loans and the bailout money. I've never held Chrysler at the same level of GM & Ford, they always seemed to be behind in innovation, quality/reliability levels, and the sale figures than the Big Two America.
        • 5 Years Ago
        I have one.

        Car Hopelessly Requiring You Start Learning Engine Repair
        • 5 Years Ago
        that's a positive spin
      • 5 Years Ago
      if there is anyone out there who still has a probe turbo or v6 running, congratulations on the awesome driving car
      • 5 Years Ago
      For the government to come out whole, GM's equity value would have to approach $70 billion --

      When GM pays back the originial bondholders, who got screwed over royaly, (maybe 15 cents on the dollar) let me know
      • 5 Years Ago
      If they can come up with $50 million when the economy is barely breathing, what the hell were they doing in the previous 10 years when they were selling cars hand over fist?

      Shouldn't they have been sitting on 100's of billions of dollars???
        • 5 Years Ago
        I believe the UAW ate all of those up real quick before driving GM into deep debt and bankruptcy.
      • 5 Years Ago
      So, the government is THREATENING us into buying from GM so that we can get our money back which were taken from us WITHOUT our consent. And this is all because Obama did not want to lose the UAW vote base. Should GM have failed, I'm sure other automakers would have picked off GM workers no problem. Free market.... that's the way to do it, instead of having the government do our shopping FOR us.
        • 5 Years Ago
        I hear ya, but remember, the market only serves itself. You seem to ascribe some kind of other goal to the market, namely that it will produce the best results for you and other citizens. It's not necessarily that way.

        One example would be the free market dismantling of our industrial base. A plant closes, and a lot of Chinese gentlemen show up and offer the highest bid for the equipment and tooling. No problem, hey, that's how the market works, they want to pay the most, take their offer. The problem is this was repeated enough times that now we don't make anything anymore. Americans lose their jobs left and right and let me assure you your buying power might go up as products get cheaper due to being built in China, but when you lose your job, your buying power drops precipitously!
      • 5 Years Ago
      If the government would lend me a fortune at the same time they left me declare bankruptcy and write off all of my "toxic assets", well I reckon i could repay them fairly quick too. I'm still not impressed with GM, not one bit.
      • 5 Years Ago
      But the problem is the UAW and Toyota are still there. And we all know what this means: another bankruptcy, another bailout, another bankruptcy, another bailout, another bankruptcy, another bailout. Oh, brother! Just wait till Geely Holdings gets here!
        • 5 Years Ago
        Quote: ""But the problem is the UAW and Toyota are still there. And we all know what this means: another bankruptcy, another bailout, another bankruptcy, another bailout, another bankruptcy, another bailout.""


        GM is in much better shape now then before the bankruptcy.

        Today GM has the advantage of:

        Very low debt
        Low US labor costs
        Unloading of healthcare costs to VEBA
        An end to expensive practices like the jobs bank and defined-benefit pensions.

        GM also has a huge and profitable presence in China, which Toyota most likely will never match given the politics of the region.

        GM has a lager presence in Europe, the worlds 3rd biggest market, than Toyota ever will given Germany's vested interest in keeping Opal alive.

        Toyota isn't ten feet tall by any means.

      • 5 Years Ago
      I love those American flags flying in that pic. Makes GM look so American ha!
        • 5 Years Ago
        ...yeah, almost as "American" as the traitors that would have preferred to see them go under rather than lend a 100 year old business the funds to keep going.
      • 5 Years Ago
      BILLION not MILLION erghhh
      • 5 Years Ago
      There will be no IPO this year or any year. Now that the Feds have their clutches in the auto industry they won't let go. If GM becomes profitable, that means a new revenue stream for the government--and the feds NEVER let a source of income go.
        • 5 Years Ago
        Totally, I mean they've never gone through with tax cuts or anything.

        Man, about 75% of the people who post on these articles need to go back to high school economics. If the government hadn't bailed out GM and Chrysler, they'd be paying about 3 million more Americans unemployment instead of getting these loans paid back. And it would have killed Ford as well, since Ford can't survive without the suppliers that worked for GM and Chrysler as well. Then you'd lose all of the dealership jobs as well. It would have been worse than the great depression. Even if the government only recoups maybe 60-70% of it's money from GM's equity it would come out ahead over the alternative.

        But no, let's pretend that the completely free market works great and there aren't inevitable huge depressions without market regulation. And let's ship all those jobs overseas to countries whose governments have no qualms about throwing money at industry. I'm looking at you, Korean and Japan.
        • 5 Years Ago
        Big Government is trying to strangle us! Quick, get the militias ready!
        Seriously, "the government", if it tried to keep GM federal, would be voted out next election. That's how democracy works. Unpopular ideas get canned.
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