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GM To Payoff Bailout Loans Early

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On: Tue, Apr 20, 2010 at 2:59PM | By: Sherry Christiansen


GM To Payoff Bailout Loans Early

General Motor’s Chairman and CEO Edward Whitacre Jr. will announce this week that GM is repaying its remaining $5.8 billion in bailout loans to U.S. and Canadian taxpayers two months ahead of schedule. Whitacre will announce the details of the loan repayment at this week’s visit to GM’s Fairfax Assembly Plant in Kansas City, Kansas. After the announcement Whitacre plans to travel to Washington D.C. to meet with House Speaker Nancy Pelosi and the Michigan congressional delegation.

In past car news, GM announced its 4th quarter earnings on April 7th and expressed that the plan was to repay the loan in full by June 2010, which is five years ahead of the deadline. Whitacre has expressed in the past that repayment of the loan is a top priority for GM after the government’s auto task force set a repayment schedule deadline of 2015 after the loan was issued last year.

GM has received a total of $52 billion from the U.S. government, in which $6.7 billion was considered a loan, and the balance was to be repaid after the company continues to recover financially from the effects of 2009’s recession, and is able to sell its public stock later this year.

GM has already paid off two $1 billion payments, leaving a $4.7 billion balance on the U.S. loans. The U.S. government has a 61% ownership of the Detroit automaker, in exchange for financial aid last year. GM will also repay the $1.4 billion borrowed from the Canadian and Ontario governments.

The company has already repaid $384 million. It’s a landmark achievement for GM which has been financially recovering from bankruptcy, and last month reported higher than anticipated earnings for the last quarter of 2009. GM Chief Financial Officer Chris Liddell said earlier this month that GM could report a profit as early as this year. GM said it lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion.

Other signs of financial recovery for GM recently include; reports of a recent announcement that includes plans to invest in the Kansas plant which would add additional jobs, and last month GM offered 661 dealers, that were on the verge of closing their doors, a chance to stay open.

According to a recent comment by president Obama, “A year later, GM is hiring again, on the verge of reopening hundreds of dealerships; that's evidence the bailout was the right thing to do."




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