GM REPAYS THE $ 8.1 BN LOAN TO US AND CANADA

Surprised!! even I am!! General motors has paid out the bailout package of  $8.1 bn  to US and Candian Governments showing the signs of strong recovery from recession last year. Since the recession, it was speculated that it would atleast take 5-7 years for global automotive industry to recover from this depression but GM has surprised us all repaying this loan 5 years ahead of schedule.

GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year.

But later the federal govt reduced the loan amount to $6.7 bn and bought the stakes in the company similarly the Canadian govt also reduced the loan to  $1.4 bn . The US Government owns 61 per cent of the company and Canada owns 12 per cent.The automaker hopes to repay the remaining $45.3 billion to the U.S. government and $8.1 billion to Canada via a public stock offering, perhaps later this year.

“I am very pleased to announce that, as of today, General Motors has repaid in full and with interest the loans made last July by the U.S. Treasury and Export Development in Canada to help launch the new GM,”  Ed Whitacre, the GM chairman and chief executive, said at a press conference today. He further added that the company had “developed a healthy, clean balance sheet” and “a cost structure that allowed the company to be competitive” less than a year after emerging from bankruptcy. “GM’s ability to pay back the loans ahead of schedule is a sign that our plan is working, and that we are on the right track. It is also an important first step toward allowing our stockholders to reduce their equity investments in GM,” he added.

GM also announced an investment of $ 257 Mn in Kansas and Michigan to to help to meet demand for Chevrolet’s Malibu sedan.

Here is what Mr Mark Reuss, President, GM North America says through his blog at GM Fastlane:

Today was an exciting day for GM. Not only did we highlight a combined $257 million dollar investment in our Fairfax  and Hamtramck assembly plants to build the next generation Chevrolet Malibu, but we also confirmed GM has paid back both loans from the US Treasury and Export Development Canada in full, ahead of schedule with interest.

Today’s announcement is a great alignment of excellent news and impressive cars, trucks and crossovers.  After all, it’s the vehicle lineup that got us here. Our sales momentum has allowed GM to make investments over the past nine months at 20 different U.S. and Canadian facilities. These investments total more than $1.5 billion, and created or restored more than 7,500 jobs. The current generation Chevrolet Malibu continues to impress consumers and third-party experts – In February we added a third shift to Fairfax to meet demand.  Our entire team at GM remains focused on our commitment to design, build and sell the world’s best cars, trucks and crossovers.

I recently met with our North American field staff – they are the face of GM to many of our dealers and we discussed how our next step must be to focus on our retail network and emphasize customer relationships. We’ve got a lot of work to do, but our team is eager to do it.

These products, the continued new investments in vehicles and jobs, the early repayment of the loans… they all mean the same thing to me.  They all represent crucial new steps in remaking GM.  And we will continue to work to make this company one that we can all be proud of again — employees, customers, dealers, suppliers and taxpayers alike.