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April 21, 2010

US: GM repays $8.4bn loan early

General Motors has paid off US$8.4bn in loans it secured from the US and Canadian governments ahead of its previous schedule.

General Motors has paid off US$8.4bn in loans it secured from the US and Canadian governments ahead of its previous schedule.

The move to repay the money will now allow the company to proceed to an anticipated public offering “as soon as possible.”

Chief executive Ed Whitacre said in December last year that GM would pay back government loans extended to finance its restructuring in bankruptcy by June and his prediction the automaker would “beat that date” has now transpired.

“These loans were part of the funding used to start the new company,” a GM spokesman told just-auto from Detroit. “We don’t envisage loans in the near future.”

“At some point GM will return to the private credit markets for day-to-day operations. One of the next steps will be to do a public offering – we don’t know the date – but we have said we would like it to be as soon as possible.”

Despite the significant repayment, both the US and Canadian governments still own around 70% of GM.

Whitacre has previously said he believed the US government would be able to sell all of its 61% equity in GM for a profit, a milestone that most outside analysts have nonetheless seen as ambitious.

“We were very pleased to have a second chance as the company had run into serious financial difficulties,” added the GM spokesman.

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