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GM to Pay Off $5.8B Bailout Loans Early

April 21, 2010
2 min to read


General Motors Co. is repaying its remaining $5.8 billion in bailout loans to U.S. and Canadian taxpayers two months ahead of schedule, The Detroit News reported.


It's another promising milestone for post-bankruptcy GM, which last month reported better-than-expected earnings for the last quarter of 2009.

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GM Chairman and CEO Edward Whitacre Jr. will make the official announcement Wednesday at at the automaker's Fairfax plant in Kansas City, Kan., two people briefed on the plans said Monday. The actual payment could be made as early as today.


The Detroit-based automaker also will announce a new investment at the Kansas plant, which could include adding jobs, a person familiar with the matter said.


The final loan repayment will total $4.7 billion to U.S. taxpayers and about $1.1 billion to the governments of Canada and Ontario.


The U.S. treasury will still own about 61 percent of the automaker, however, because about $43 billion of the $50 billion in aid that the government gave GM during its bankruptcy last year was converted to equity. Canadian taxpayers swapped about $8 billion for a 12 percent stake.


Also Wednesday, Whitacre will make his first visit to Capitol Hill since he took GM's helm in December. He is to meet with House Speaker Nancy Pelosi and Michigan lawmakers.

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Under its agreement with the Treasury Department, GM was to repay the loans by June 30. The automaker will tap unused Treasury funds being held in escrow to repay the government. The early repayment is aimed in part at reassuring American consumers who were turned off by the massive government bailout that saved GM from collapse.


It will take months or even years to determine if taxpayers will be completely repaid because the Treasury can't start selling its shares until GM holds an initial public stock offering. That likely won't happen until next year.


GM spokesman Greg Martin would neither confirm nor deny the automaker's repayment plans. A Treasury Department spokeswoman, Meg Reilly, also declined to comment.


GM has already repaid $2 billion of $6.7 billion in U.S. loans, and about $400 million of $1.4 billion in Canadian government loans.


GM Chief Financial Officer Chris Liddell said this month that GM could report a profit as early as this year.

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The automaker lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion.


The White House plans to embrace the news of GM's full repayment as a sign of its post-bankruptcy progress. President Barack Obama has praised GM's payments to date as a sign of progress.

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