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GM pays back government loans from US, Canada

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GM pays back government loans from US, Canada


AP Auto Writer

DETROIT (AP) -- General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments, a move its CEO says is a sign automaker is on the road to recovery.

GM CEO Whitacre will formally announce the loan paybacks Wednesday at the company's Fairfax Assembly Plant in Kansas City, Kansas, where he will also announce that GM is investing $257 million in that factory and the Detroit-Hamtramck plant, both of which will build the next generation of the midsize Chevrolet Malibu.

GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. The U.S. considered as a loan $6.7 billion of the aid, while the Canadian governments held $1.4 billion in loans.

The U.S. government payments, made Tuesday, came five years ahead of schedule, and Whitacre said they are a sign that the automaker is on its way toward reducing government ownership of the company. The payments on the Canadian loans were also made Tuesday.

GM hopes to repay the remaining $45.3 billion to the U.S. government and $8.1 billion to Canada, money it received in exchange for large stakes in the company. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent. GM plans to repay both with a public stock offering, perhaps later this year.

"Nobody was happy that GM needed government loans - not the governments, not the taxpayers and, quite frankly, not the company," Whitacre wrote in an op-ed article that appeared on The Wall Street Journal's Web site Tuesday night. "We believe we can best thank the citizens of the U.S. and Canada by making sure that their investments are hard at work every day, building high quality, fuel-efficient vehicles."

The factory investments in Kansas and Michigan will not create any new jobs, but will preserve jobs at both plants. The Kansas plant, which employs 3,869 workers, also builds the midsize Buick LaCrosse luxury sedan. The Detroit-Hamtramck plant, which has 1,048 employees, now builds the Cadillac DTS and Buick Lucerne large sedans and is gearing up to make the Chevrolet Volt rechargeable electric car.

During the financial crisis that led to GM filing for bankruptcy protection last year, the automaker closed 14 factories and shed more than 65,000 blue-collar jobs in the U.S. through buyouts, early retirement offers and layoffs. The company now employs about 40,000 hourly workers in the U.S.

Preserving jobs at the two GM plants won't help the nation's unemployment picture, but it won't make it worse.

Employers nationwide in March added 162,000 jobs, the most in three years. But the pace of the economic recovery and job creation won't be robust enough to quickly drive down the unemployment rate. It's been stuck at 9.7 percent for three months, close to its highest levels since the 1980s.

GM had made about $2 billion in loan payments to the U.S. government and $384 million to Canada in December and March, and had promised to repay the full loans by June. But company officials have said its cash flow, mainly from the sales of newer models, has been better than expected, allowing it to make the remaining $5.8 billion in payments early.

Repaying the loans has been a top priority for Whitacre.

GM officials say the company's public stock offering will take place when the markets and the company are ready. They will not predict how much of the remaining government debt will be repaid from the stock offering, but said it likely will take years for the governments to divest themselves fully.

The stock offering hinges on GM posting a profit, which Whitacre has said could come this year. GM lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion.

After the event at the Kansas City plant on Wednesday, Whitacre is scheduled to fly to Washington, where he will meet with House Speaker Nancy Pelosi and other lawmakers.



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GM keeps loan promise



WASHINGTON -- General Motors CEO Ed Whitacre is to announce Wednesday that the automaker will soon pay off $5.8 billion in loans from the U.S. and Canadian governments well ahead of a June 30 deadline, a move it has promised since last year.

Whitacre is to announce the payment at GM's plant in Kansas City, Kan., and then fly to Washington to meet with House Speaker Nancy Pelosi and Michigan's congressional delegation, people familiar with the plans said Monday.

GM is to use the move to highlight its steps toward issuing shares to the public and helping the U.S. government get out of its 60.1% ownership stake in the automaker. GM officials have said the company could break even this year, thanks to massive cost cuts under bankruptcy. The automaker reported a $4.3-billion loss for the last half of 2009.

The automaker's payments are to include $4.7 billion to the U.S. Treasury and $1.1 billion to the Canadian government; it had already paid $2.3 billion on both loans. The money comes from a $16.4-billion escrow fund set up by the two governments as part of GM's bankruptcy that the automaker is required to pay back by June.

The U.S. government has put nearly $50 billion into saving GM from collapse, an amount Obama administration officials have said was unlikely to be returned entirely when GM begins to sell shares publicly. Based on analysts' estimates, the government's stake could approach the $30.1 billion spent by the Obama administration solely on GM's bankruptcy.



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GM repays bailout loans to U.S., Canada

04/21/2010, 9:21 AM BY DREW JOHNSON

As expected, General Motors has fully repaid its outstanding bailout loans to governments in the United States and Canada. General Motors cleared its books with a final payment of $5.8 billion on Tuesday night.

Of that final payment, $4.7 billion went to the United States government and the remaining $1.1 billion to Canada, after exchange rates. In all, GM received $50 billion in bailout loans for the U.S. and Canada.

GM is still on the hook for about $43 billion in taxpayer-funded loans, but much of that has been converted into equity shares. The U.S. Treasury currently owns a 60.8 percent stake in GM while the Canadian government owns an 11.7 percent share of the Detroit automaker. The remainder of GM is owned by the UAW’s healthcare fund and Motors Liquidation.

GM is hopeful it will be able to offer an IPO by the end of the year. By going public, U.S. and Canadian governments would be able to greatly reduce their stakes in General Motors.



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Whitacre: Remaining $5.8B in gov't loans paid back 5 years ahead of schedule

by Zach Bowman (RSS feed) on Apr 21st 2010 at 10:55AM

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.



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