GM to Repay Government Loans Early
The announcement came with a better-than-expected loss report since the company emerged from bankruptcy in July. The company posted a $1.2 billion net loss for the roughly three months since it reorganized.
“We have significantly more work to do, but today’s results provide evidence of the solid foundation we’re building for the new GM,” president and CEO Fritz Henderson said in a statement. “With a healthier balance sheet and a competitive cost structure, our focus is on driving top line performance.”
GM will begin paying off its government loans next month, with $1 billion quarterly payments to the U.S. government and $200 million to the Canadian government. That would put the company on track to pay off its $6.7 billion debt to the United States and $1.4 billion to Canada by 2011, but Henderson said that the company would endeavor to stick to an accelerated pay schedule. The government loans come due in July 2015.
“It’s a commitment of the company that we need to start doing this,” Henderson said.
The company attributed its balance sheet results to its reorganization performance emerging from bankruptcy, including cutting jobs and dealerships, as well as better-than-expected sales in recent months.
GM has received $50 billion in U.S. taxpayer assistance since the end of 2008. The $6.7 billion the company will repay in loans represents only a fraction of that amount. Earlier this month, a report by the Government Accountability Office concluded that full repayment of the $81 billion lent since December to rescu e GM and Chrysler was unlikely.
“It is my mission to disprove the G.A.O., to create value in the company so the taxpayers can get a return on their investment,” Mr. Henderson said.
GM has said it intends to take the restructured company public late next year to better help taxpayers recoup their investment.