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December 21, 2009

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GM pays back first installment

GENERAL Motors Co has made the first payment on its giant loans from the United States and Canadian governments, sending US$1 billion to the US Treasury and US$192 million to Canada.

The company plans to repay both governments in full by the end of June, but Chairman and acting CEO Ed Whitacre Jr said last Friday that repayment is contingent on no downturns in the economy or GM's business.

GM owes the US government a total of US$52 billion, with US$6.7 billion of that in loans. At least part of the remaining US$45.3 billion could be repaid when GM sells stock, perhaps late next year.

The US government currently owns about 61 percent of the troubled Detroit auto maker, which it received in exchange for putting up money that is keeping the company afloat. GM also owes US$1.4 billion in loans to the Canadian and Ontario governments.

Whitacre last week committed to repaying the loans by the end of June. His predecessor as CEO, Fritz Henderson, announced plans to start making eight quarterly payments when GM released third-quarter earnings in November.


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