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Whitacre says priority on repaying loans, finding CEO

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Whitacre says priority on repaying loans, finding CEO

12/16/2009, 5:35 PMBY MARK KLEIS

Whitacre announced to reporters that among other pressing issues, such as finding a new CEO, GM is placing priority on paying back $6.7 billion in federal loans. Whitacre also pointed out that GM will be paying back $1.2 billion on December 31.

Federal aid to GM including the periods leading up to, during, and after the bankruptcy restructuring total $50 billion. The running total of $50 billion in federal aid was eventually converted largely into equity, in exchange for debt.

The U.S. government currently owns a 61 percent stake in GM, for which it forgave $42 billion in federal aid. The long term plan for recouping the taxpayer money is to eventually sell off the GM stock in spurts.

According to GM’s agreement with the U.S. government, GM is required to eventually pay back the remaining loan of $6.7 billion in full by July 2015. According to the payment schedule, GM will make payments of roughly $1 billion each quarter from now until July 2015 – with the possibility that it may be paid back sooner, said Whitacre.

“I don’t know if we can speed that up or not,” Whitacre said. “It would be nice if we could.”

GM has also announced that if it cannot find a buyer for the Saab brand by year’s end it will be forced to close the brand down completely. GM had hoped to use funds from the sale of Saab to help pay back some of its federal loans.



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And what if the stock sale doesn't recoup the $42 billion the government forgave? It looks like the government lost money on this deal, but then again, they waste billions on lots of other things too. But I don't think Whitacre should be trying to get brownie points for paying back 10% of a $60 billion loan.

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Says $50B, not "$60B".

Future stock ownership was 'bought' for $42B, by my abacus, that's leaves $8B to be repaid. GM has already made 1 payment I assume, since the balance is stated as "$6.7B".

Paying $1.2B on $6.7B owed is 18%. That's a major return in a short order.

MANY critics were thumping their fists that not a dollar would ever be repaid.


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What the stock may do in the future is anyone's guess, so that bridge will have to be crossed then. Gov can sit on their holdings until it breaks even if they decide to.

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