• Apr 21st 2010 at 10:55AM
  • 66
This morning, General Motors Chairman and CEO Ed Whitacre confirmed that the company has paid back a total of $5.8 billion in federal loans a full five years ahead of schedule. Whitacre attributed the company's ability to make the payment, with interest, to its new strategy and the success of new models like the Buick Lacrosse and Chevrolet Malibu.

GM received some $50 billion in loans from both the U.S. and Canadian governments, with the majority of those funds converted into company stock. The remainder totaled over $8 billion owed to the U.S. and Canadian governments, all of which has now been paid back less than a year after GM emerged from bankruptcy. The news was announced at a press conference at the company's Fairfax, Kansas manufacturing facility, which will soon add production of the hot-selling Chevrolet Malibu, and was attended by Kansas Governor Mark Parkinson and other members of government.

As it is, the federal government still owns 60.8 percent of GM, which means that whenever the company issues its IPO, the tax payers could easily get all of their money back.

[Image: Stan Honda/AFP/Getty]
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GM Pays Back Government Loans in Full, Announces Investment in Fairfax, Detroit Hamtramck

o GM pays back its loans from U.S. Treasury and Export Development Canada
o Strong sales, confident outlook enable payback ahead of schedule
o $257 million investment for Malibu at Fairfax, Kansas, and Detroit Hamtramck

KANSAS CITY, KANSAS – General Motors Company Chairman and CEO Ed Whitacre today announced that GM has made its final payment of $5.8 billion to the U.S. Treasury and Export Development Canada, paying back its government loans in full, ahead of schedule.

The announcement came at a ceremony here to highlight an investment of $257 million at GM's Fairfax, Kansas, and Detroit Hamtramck assembly centers. The investment will prepare Fairfax to build the next generation of Chevrolet's award-winning Malibu, and make Detroit Hamtramck a second source for Malibu, ensuring that Chevrolet can meet market demand for this popular mid-size sedan.

"GM is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse we build here in Fairfax," said Whitacre. "We are now building some of the best cars, trucks, and crossovers we have ever built, and customers are taking note. Our dealers are increasing their sales, we are investing in our plants, and we are restoring and creating jobs."

The U.S., Canadian, and Ontario governments, as part of the launch of the new GM, provided loans of $8.4 billion and took equity stakes in the new company. Today's payment of $5.8 billion ($4.7 billion to the U.S. Treasury and $C1.1 billion to Export Development Canada) completes the payback of these loans.

"GM's ability to pay back the loans ahead of schedule is a sign that our plan is working, and that we are on the right track. It is also an important first step toward allowing our stockholders to reduce their equity investments in GM," said Whitacre. "We still have much hard work ahead of us, but we are making progress toward our vision of designing, building, and selling the world's best vehicles.

"We appreciate the support the taxpayers have given GM, and our great new products are tangible results of that support."

Strong sales support manufacturing, jobs

Strong sales of new Chevrolet, Buick, GMC, and Cadillac products are fueling a steady increase in production as GM works to meet growing customer demand.

Sales for GM's four brands are up 36 percent through March versus the same period in 2009, and many newly introduced cars and crossovers – including Chevy Equinox, Camaro and Traverse; GMC Terrain and Acadia; Buick LaCrosse; and Cadillac SRX – remain in short supply at GM dealers.

The Fairfax plant currently builds two of GM's strongest selling cars, the Chevy Malibu and Buick LaCrosse. For the first three months of this year, GM's U.S. dealers delivered more than 49,000 Malibus and 14,000 LaCrosses, representing a 58 percent increase over the same period last year. In response to this strong demand, Fairfax in February added a third shift of approximately 1,050 jobs, bringing total employment at the plant to more than 3,800.

Fairfax will become the primary source for the next generation of the Malibu. Detroit Hamtramck, which builds the Buick Lucerne and Cadillac DTS, will be equipped to build the Malibu as well, ensuring that Chevrolet can meet market demand.

Detroit Hamtramck will also build the Chevy Volt electric vehicle with extended range, which launches this year. On March 31, the plant celebrated a major milestone, the building of the first pre-production Volt on the regular assembly line.

The Malibu-related investments of $136 million in Fairfax and $121 million in Detroit Hamtramck will include facilities, machinery and equipment, and tools.

Since the launch of the new GM last July, the company has announced investments of more than $1.5 billion at 20 facilities in the U.S. and Canada. These investments restored or created more than 7,500 jobs, and they demonstrate a strong commitment to GM's future and to the United States and Canada.

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    • 1 Second Ago
      • 5 Years Ago
      This is smoke and mirrors people.....PR

      Read the GAO report from last year:

      • 5 Years Ago
      Good job and congratulations GM!!
      • 5 Years Ago
      "...the tax payers could easily get all of their money back."

      In addition to GM paying back the Government loan from the Government escrow account, GM will need to become extreemely profitable in a short amount of time and offer stock in an initial public offering for the the taxpayers to get their money back.

      GM had 610 million shares, which peaked at $87 back in the bubble days of January 1999, for a total market cap of $53 billion- that is the most that GM's stock has ever been worth in the history of the company.

      For the US government to get the remaining $43 Billion back by selling 61% of GM in an IPO ($43 Billion divided by .61) the total market cap of General Motors will need to be $70.5 Billion dolars, or 40% more valuable than GM has ever been in the history of the company. You would have to be completely dillusional to think that GM is worth 40% more now than it has ever been in the history of the company.

      It is not "easy" for the government to get ALL of it's money back (our tax dollars)- it is close to impossible. But we may get some back. Hopefully GM will remain viable enough that the taxpayers will not get stuck footing the bill for their pensioners too.
        • 5 Years Ago
        They won't sell it all at IPO.

        It is going to take some time to get even a majority of the money back.
        • 5 Years Ago
        In 1999, the stock market was higher than it is right now- you can inflate that also. But even if you neglect that and only subject GM to inflation, GM would still need to be valued higher than it has ever been in the history of the company (it was already overvalued in 1999, when the company was much bigger and stronger).

        I am not being short-sighted, I just don't believe that a smaller company that still has negative net worth (even it is less negative than it was before), has yet to turn a profit, has reduced market share, has rapidly increasing competition, has tens of billions of dollars of unfunded pension obligations comming due in the next few years, and has just burned previous investors will not command record valuations.

        You would have to be a true zealot to have that much faith in a company like GM when none of the financials support it having anywhere near that valuation.
        • 5 Years Ago
        I'll play both sides of this. If the Government is behind all this, you really think they'll want to be proved wrong b yt GM not being to pay them back with an IPO? Even if it doesn't happen all at once, it will happen swiftly. They will find away for all of GM's shares to be sold back to private investors even if it means giving those people who buy large portions of the stock other deals in places to make up for the expenditure.

        In short, it will be a great investment for people and they will be highly motivated to buy GM stock because the government will probably help them do it.

        Just a thought from a tinfoil hat wearing GM supporter.
      • 5 Years Ago
      Wait, all this just to boost their bonuses? ;)
      • 5 Years Ago
      Things are looking up now.
      • 5 Years Ago
      @lne937 I took the value I got and broke down to a value of what it looks like on a daily basis as if I were to use it. Not enough for me to cry about. @ Ford Tang: I don't see it as a silly way to look at it. There is enough money going around for programs such as transportation improvement an what not to go around. It's all budgeted. Especially all that money going into wars. So 50 billion is nothing in my opinion especially when it's not affecting my everyday livelyhood.
      • 5 Years Ago
      I'm glad GM is doing well.Infact too well.It seems they rather quickly in the span of 2 years or less, created a new lineup,cleaned house, brought sales up, and oh yes negotiated getter labour deals.I think the overall exersise was to break down the unions for this period.Just saying...
      • 5 Years Ago
      Good luck with the "new" GM IPO investment.I certainly would approach that as buying"penny"stocks as an investment.Then again you can always buy a lottery ticket too.By the way doesn't Whitacre look like a historical figure?The name P.T. Barnum comes to mind.
      • 5 Years Ago
      I think they desperately want the government to get out of their business so they can go back to dividing up the stockholders moneys in huge bonuses while the stockholders wonder what's wrong? To do that they need to float millions of shares of new stock (which further dilutes the shareholder value) to get the cash to buy the government out of their business again. There is so much debt there it's like a house of cards. They seem to be pretty good jugglers, but I don't see investors rushing to the slaughter again.
      • 5 Years Ago
      Good. Next step, become a private company again.
        • 5 Years Ago
        I'm going to be in that line waiting to buy GM stock. I'm not totally convinced they have have righted all their wrongs but I definitely believe they are on the right track.
        • 5 Years Ago
        GM is currently private, and the previous bondholders whose equity stake is supposed to be secured, got the shaft by being forced to convert their bonds into stock.

        I'd like to hear what the analysts have to say about GM if it IPO's. I think a lot of these bondholders who got screwed will sell off their shares soon after the IPO to get out of GM.
        • 5 Years Ago
        I think you are confused. After the IPO, they will be a public company. Private companies(like Chrysler for a while) don't offer stocks publicly. When companies have an IPO, they are said to "Go Public".

        Just want to clear up any misconceptions.
        • 5 Years Ago
        Woohoo! Go GM!!! =), I mean, being bailed out by the public wasn't a thing to be proud of, but paying them back 5 YEARS ahead of the schedule is, and is really telling something about GM.

        Now get your gears together and take back your #1 in the world from Toyota :)

        • 5 Years Ago
        They ARE a private company.

        They need to become a publicly-traded company again to convert the government equity into shares of stock.
        • 5 Years Ago
        They are a private company now, there is no publicly traded stock.
        • 5 Years Ago
        Next step?

        "Whitacre attributed the company's ability to make the payment, with interest, to its new strategy and the success of new models like the Buick Lacrosse and Chevrolet Malibu. "

        I think the next step is to attribute the ability to pay back money to a bankruptcy which cleaned off the red in their books instead of mocking the public (you and me) by saying "look how good we're doing".

        Yeah I'm happy they paid some money back but the compounding effects of their bankruptcy linger and will for some time.

        GM, great job paying it back but don't lie to me!
        • 5 Years Ago
        @Alex: "I'm going to be in that line waiting to buy GM stock."

        Whew, I thought you were going to say "bonds".
      • 5 Years Ago
      Sounds like GM got a few of those balance transfer offers that clog up my mailbox.
      • 5 Years Ago
      Divide that by the population of working tax payers and what you get back. Cents?

      Try hundreds of dollars. Maybe if you "go into the math", you should learn to actually do math, instead of arriving at the conclusion you've decided is correct, facts be damned.

      Honestly, how could you think billions of dollars divided by millions of taxpayers would end up as "cents"?
        • 5 Years Ago
        Hundreds of dollars divided by 365. I am looking at on a daily basis. How cents per day help me? NONE!!!!. I know my math.
        • 5 Years Ago
        By taking the hundreds of dollars and dividing it by 365. I am looking at it as how will $214 of tax money would help me on a day to day basis. That's how I got cents. Divide the 50 billion by amount of tax payers. Then take the hundred dollar amount and divide by 365. Looking at it in a different persective.
        • 5 Years Ago
        $300 = 30,000 ¢
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