Whitacre says priority on repaying loans, finding CEO

Whitacre says priority on repaying loans, finding CEO
By Mark Kleis - Posted December 16th 2009

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 each quarter from now until July 2015 – with the possibility that it may be paid back sooner, said Whitacre.
The latest reports suggest that Whitacre intends to pay back the debt to the U.S. and Canadian governments as early as June 2010.
“We intend to pay the debt,” Whitacre said today. “We’ll be finished by June.”
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.
7 COMMENTS
1. psiclone225 days ago
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  Glad to hear the news but somehow the math in this story isn’t adding up. At a repayment of $1 billion per quarter, it would take less than two years to repay the $6.7 billion loan. Paying until mid-2015 would be on the order of $20 billion.
  
  This other article (link below) states, “[Whitacre] aims to repay $8.1 billion in U.S. and Canadian government loans by the end of June. Henderson’s target was late 2011.” That evidently means June of 2010 or more likely 2011, not 2015. The story is linked on two other auto news sites.
  
  source: http://news.yahoo.com/s/ap/20091215/ap_on_bi_ge/us_gm_whitacre
  
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2. carstuff225 days ago
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  GM will pay off the $6.7 billion BY June, 2010. Do not be surprised if it is paid off sooner if the economy continues to improve as forecasted.
  
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3. Ashes to Ashes_Dust to Dust225 days ago
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  A historical travesty for the American way of life, and the American taxpayers. White collar crime as its finest brought to you by America’s top lobbyists, supposed top executives, and your shoddiest politicians. Add to that a historical blow for American innovation, competition, and the way America now does business. Not only is this corporation unashamed for stealing from the taxpayers—GM is downright proud of it.
  
  GM, an American Taxpayers Holocaust
  
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4. carstuff225 days ago
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  aa, making things up again? Article is on paying back early.
  
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5. Cardemon04224 days ago
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  could you imagine how interesting it would be if Ashes and NMOFGM were actually the 2 personalities of a schizophrenic person?
  Is this why they booted Henderson? He wasn’t making bold enough false statements. I doubt they’ll be able to pay back $6.7 Billion in 6 months without worsening their already delicate financial situation. I’d rather see them use that money to improve the company before they take GM public, then begin repaying the loan. But maybe eliminating this loan will improve the company value more than investing the money in infrastructure. we’ll see
  
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6. carstuff224 days ago
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  Card, have you been gone? GM has $43 billion in CASH. We gave them too much money (by our choice, not theirs). They increased their cash assets by over $3 Billion in the 3rd quarter. They have cut their overhead and structural cost so much they are the low cost auto producer in this country. Bankruptcy can do that.
  
  They still have more restructuring money to put out (Delphi, UAW, Dealers, etc) but they should, even after paying off the government the pre bankruptcy loan, have $20 billion in cash assets. They need about $10 billion for day to day business. So unless we hit a big economic downturn they are going to have plenty of cash.
  
  I think the issue was that Henderson was being the old culture, very conservative GM. Whitacre and the board want GM to play a bit looser and take some chances. And yes, eliminating the loan will make GM more attractive during an IPO and more attractive to consumers who may be put off by a government owned company (anybody here fit that description?).
  
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7. leftwingagenda224 days ago
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  ashes, nothing personal, but saving millions of jobs in the midst of the biggest financial crisis in 80 years is a “taxpayer holocaust” and yet the 600 billion dollar war in iraq during the same period is ok?
  
  your position is fundamentally flawed, and easily dismissed…
  
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