GM to start repaying debt to U.S. government next month

[TomCADem]

Source: Washington Post

General Motors is expected to announce on Monday that it will begin repaying its debt to the United States next month, years earlier than required.

The nation's largest automaker plans to pay $1 billion per quarter until the $6.7 billion loan is repaid, according to a source familiar with the matter.

The plan does not cover all of the $50 billion the United States has invested in the company.

How much the government will receive on its investment depends on GM's eventual stock value. In exchange for the $50 billion, the United States holds the $6.7 billion debt, $2.1 billion in preferred stock and a 61 percent stake in the company.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/11/15/AR2009111503270.html?hpid=topnews

[cal04]

1. GM Said to Repay Government $6.7 Billion Sooner Than Required

Source: Bloomberg

General Motors Co., the largest U.S. automaker, will repay $6.7 billion of the $49.9 billion in aid it received from the federal government starting next month, more than five years sooner than required, a person familiar with the company’s plans said.

GM plans to make a payment of $1 billion a quarter, with the first installment Dec. 31, said the person, who requested not to be identified because the transaction hasn’t been announced publicly. The Treasury Department is unlikely to recover all of the aid it provided, a congressional oversight panel said in a report Sept. 9.

Detroit-based GM is working to overhaul its operations and return to a profit after filing for Chapter 11 protection June 1 in the wake of $88 billion in losses since 2004. The company is able to start repaying aid because it has a stronger financial position than anticipated, according to the person.

GM isn’t obligated to make a payment until July 20, 2015, the person said. At $1 billion a quarter, the $6.7 billion would be repaid by the second quarter of 2011.

Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=aoTKqyDQRH3c

[dmallind]

2. Great - they join many of the banks in early repayment! NT

[bluestateguy]

3. I wish they had closed all their dealerships in Alabama, just to spite Dick Shelby

nt

[targetpractice]

4. Why?

Don't we have equity? If we have a big stake, and if GM is doing better than expected... Shouldn't we keep it? Especially if our equity stake allows us to vote as a major shareholder.


Ummm... Wait, I'll bet the previous administration constructed a sweetheart bailout to favor GM not the taxpayers.

Am I right? Or, am I right?

[alcibiades_mystery]

5. The deals with the automakers were made under this administration

The US government doesn't want to be in the car business, and never did. It was forced to save GM from bankruptcy, which would have plunged us into an even worse recession. The fact that GM will be paying back the government sooner than expected actually shows the success of the strategic plan that was put in place for the car-makers.

[targetpractice]

7. Gotcha...

I guess I (as a taxpayer) am pissed at the AIG bailout that went to pay off its Goldman -Sachs obligations at 100 cents on the dollar. A smart investor would have let AIG fail and take an equity stake in GS... Since they seem to be siphoning wealth from society and growing beyond belief.

I understand how our bailouts were necessary... But, normally if a company gets rescued, the rescuer takes a big equity stake.... for the potential upside.

[alcibiades_mystery]

8. If AIG failed in the fall of 2008

We'd be in Road Warrior territory.

Smart investor nothing. It was about the quaint notion that money would continue being the vehicle of exchange, period.

[Ikonoklast]

11. Letting AIG fail would have been catastrophic, yes.

But letting GS take a haircut, instead of being made completely whole, should have been allowed.

But, we know where this administration stands on all things GS.

[alcibiades_mystery]

12. Oy gewalt

:eyes:

[Cha]

6. Rec'd..thanks Tom

for this positive news.

[Vidar]

9. Good for GM.

[Socal31]

10. Great.

When do we give it back to China?

[treestar]

13. This is good news, but of course some people insist on being bitter