Next Wednesday, General Motors says it is going to make its second loan payment to the U.S. and Canadian governments as part of its plan to repay all government loans by June.
GM’s second loan payment to the U.S. and Canadian governments will be to the tune of $1 billion and $192 million, respectively. GM’s loan from the U.S. Treasury was worth $6.7 billion initially, but the company paid down $1 billion of it last December. GM also made its first payment of $192 million to the Canadian government at that time. The initial Canadian loan was worth $1.4 billion.
“Given the progress the company is making, GM has every confidence that the remainder of the loans will be paid in full by June2010; five years ahead of schedule,” said Ed Whitacre, GM CEO, in a statement.
GM will make a second loan payment next week with the money left over from the company’s fast-track bankruptcy, not from its operations. Although repayment isn’t required until 2015, GM is keen on proving the U.S. government made a good investment and is looking to pay off all its government debt ahead of schedule. Once GM has paid back its loans, the U.S. government will still hold a 61 percent stake in GM. In order to get out of government ownership, GM will hold an initial public offering to become a publicly traded company once again. The U.S. government is hoping to recoup the roughly $50 billion it gave to GM to get it through bankruptcy and become its majority shareholder.
Source: GM, Automotive News