Friday - April 23, 2010

Working Towards Freedom

Not bad. Nice effort. So, does this mean GM is now “free at last” and can operate as a privately owned company? Not hardly. They still owe the government zillions. This was just a drop in the bucket.

General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments, a move its CEO says is a sign automaker is on the road to recovery.

GM CEO Whitacre formally announced the loan paybacks Wednesday at the company’s Fairfax Assembly Plant in Kansas City, Kansas, where he also announced that GM is investing $257 million in that factory and the Detroit-Hamtramck plant, both of which will build the next generation of the midsize Chevrolet Malibu.

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. The U.S. considered as a loan $6.7 billion of the aid, while the Canadian governments held $1.4 billion in loans.

The U.S. government payments, made Tuesday, came five years ahead of schedule, and Whitacre said they are a sign that the automaker is on its way toward reducing government ownership of the company. The payments on the Canadian loans were also made Tuesday.

GM still owes $45.3 billion to the U.S. and $8.1 billion to Canada, money it received in exchange for large stakes in the company. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent. GM plans to repay both with a public stock offering, perhaps later this year.

GM officials say the company’s public stock offering will take place when the markets and the company are ready. They will not predict how much of the remaining government debt will be repaid from the stock offering, but said it likely will take years for the governments to divest themselves fully.

The stock offering hinges on GM posting a profit, which Whitacre has said could come this year. GM lost $3.4 billion in the fourth quarter of 2009 on revenues of $32.3 billion. After the event at the Kansas City plant on Wednesday, Whitacre heads to Washington, where he is scheduled to meet with House Speaker Nancy Pelosi and other lawmakers.

I don’t think they are ready for an IPO yet. Not until they have paid off enough of their government debt to be 51% privately owned. Or 65%, given the uncertainty in the automotive marketplace and the possibility that they might need large infusions of cash from the government at some future date. They screwed us all with their bailout and the government’s takeover. Never again.

So keep paying down that debt GM. This is a good first effort. But I won’t be buying your stock, or your cars, until you can show me a lot more than just a profit for one measly quarter. And throw out the unions, or at least rip out most of their teeth. I’ll be damned if I’ll put a nickel into your company until you do.

Posted by Drew458     on 04/23/2010 at 12:00 PM   
Filed Under: • Big Business • planes, trains, tanks, ships, machines, automobiles •  
• Comments (7) • Trackbacks(0)  Permalink •  

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