GM Expected to Finish Payments this Week to U.S., Canada
DETROIT - General Motors Co. CEO Ed Whitacre intends to announce on Wednesday that GM has repaid the remaining $5.8 billion in loans from the United States and Canada, a person with direct knowledge of the plans told Bloomberg.
Whitacre will be at GM's Fairfax, Kan., assembly plant to disclose the payments, said the person, who asked not to be identified because the details are still private. The U.S. is owed $4.7 billion, and the total is $1.1 billion for the governments of Ontario and Canada, the person said.
Eliminating the government debt shows Detroit-based GM is moving toward a return to independence, said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Mich. The U.S. owns a 61 percent stake after GM received about $50 billion in aid tied to its 2009 bankruptcy.
“It's a big step,” Mikelic said. “I don't think it's the be-all, end-all of their turnaround. But it's a step forward, and you can't deny that they're in better shape if they're able to repay that debt.”
GM received $8.4 billion in loans as part of its government assistance, with the rest in equity. Whitacre, 68, said in December he was starting to pay down the loans and said he would complete the task by the end of June. A GM spokesman, Tom Wilkinson, declined to comment.
GM's payment plan adds to evidence that the auto industry is recovering from the slump in 2009 that dragged U.S. sales to their lowest since 1982. On April 1, GM posted a 21 percent gain in March domestic deliveries, the third increase in a row over a year earlier. U.S. industrywide sales rose for a fifth month.
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