Why is this man smiling? Perhaps it helps that GM CEO Ed Whitacre plans to pay down another $1 billion in government loans.
With a goal of paying off its entire debt to the U.S. Treasury this year, General Motors has anounced it will write another $1 billion check to Uncle Sam by April 1 – and that’s no joke. The maker also plans to send a $192 million debt repayment to Ottawa.
That would leave another $4.7 billion to be repaid to Washington for the bailout the maker received, last year, to keep it in business; GM has already repaid $1 billion. And its goal is to be able to tear up the loan papers by June.
“GM has every confidence that the remainder of the loans will be paid in full by June 2010; five years ahead of schedule,” CEO Ed Whitacre said in a statement from the automaker.
For those trying to do the math, GM got $6.7 billion in federal loans during a financial crisis that ultimately led to its declaration of bankruptcy. But the “new” General Motors also received billions more that was invested in the form of equity, the federal government now owning a full 61% of the reborn automaker.
The Canadians tossed some of their own money into the hat and received a smaller equity stake, as well.
It’s clear that Whitacre and his team would like to say farewell to the government as soon as possible. Though the CEO insists Washington has been a mostly hands-off investor, it has stuck its nose into the automaker’s Renaissance Center headquarters on more than a few occasions.
Just this week, the White House pay czar – who oversees executive salaries at companies that received federal bailouts – stepped in to tweak the paychecks going to Whitacre and other top GM managers.
There continue to be rumors and reports suggesting the giant automaker might stage an Initial Public Offering as early as late 2010, which would take GM public again. But Whitacre has repeatedly cautioned that he won’t stage an IPO before the appropriate time. That would likely depend on stabilizing market share, propping up sales, showing the ability to turn a profit – and measuring the pulse on Wall Street to ensure GM’s stock can command a reasonable price, insiders stress.