GM Begins Loan Repayments to U.S. and Canadian Governments
In a three-sentence press release late Friday afternoon, GM Chairman Ed Whitacre announced that the company has made its first payments to the U.S., Canadian federal and Ontario provincial governments and reiterated the company's plan to pay them back in full by June 2010.
"I am pleased to announce that today, GM followed through on its commitment to begin loan repayments to the U.S. and Canadian and Ontario governments. We paid $1.0 billion to the U.S. Treasury and $192 million to Export Development Canada," Whitacre said. "We are grateful for the support the governments have provided us. We look forward to continuing repayments through June 2010, at which time the balances will be paid in full, assuming no downturn in the economy or business."
Between December 2008 and June 2009, the U.S. government, the Canadian government and the Ontario provincial government all loaned GM roughly $10 billion to stay in business, with $6.7 billion coming from the U.S. government. GM has committed to repaying those loans by mid-2010 and made the first payments toward that end today.
What of the other tens of billions of dollars that GM owes the U.S. and Canada? The rest of that money came by way of those governments buying shares of the automaker, 60% and 12% respectively. That money will not be repaid until GM files its initial public offering, which the automaker believes will generate enough money from stock sales to buy back the shares from the respective governments, effectively returning the money. GM has not said exactly when it will make its IPO, but is believed to be planning it for some time in 2010.