GM moving to put its financial house in order, says CFO Liddell.
General Motors Company has contributed $4 billion to its long-underfunded hourly and salaried pension plans in the United States.
Chris Liddell, GM vice chairman and chief financial officer, said $2.7 billion was contributed to the hourly plan and another $1.3 billion to the salaried plan.
The $4 billion contribution was another step towards putting the company’s financial house in order. GM’s U.S. pension plans currently provide benefits to approximately 688,000 participants, said Liddell.
“This pension contribution puts us another step closer to our goal of fully funding our pension plans and achieving minimal debt. With a healthy balance sheet, a lower cost structure and focus on revenue generation, we continue to put in place the fundamentals for sustainable success,” Liddell said.
All of the company’s U.S. pension plans were, as of December 31, 2009 underfunded in total by $17.1 billion. The company will next re-measure its U.S. pension plans at year end 2010 and their funded status will be included in the 2010 Form 10-K.
The pension liabilities were one of the key debts that remained after GM completed its bankruptcy, last year.
Last month, GM successfully concluded an initial public offering of stock, the IPO raising a record $23.7 billion dollars for the company’s shareholders, including the U.S. Treasury Department, as well as GM’s own treasury, which kept the proceeds from the sale of convertible preferred shares.
GM isn’t alone in hoping to pay down its debt. Ford has been making similar moves, in recent months. The automaker was the only one of the Detroit Big Three not to go through bankruptcy – or to receive a federal bailout – so it didn’t have the courts to help cleanse its balance sheet.
On Tuesday, Ford converted $1.9 billion in debt to common stock – a process it used earlier in the year, as well, to trim several billion more from its liability column. So far this year, Ford has reduced its debt by about $12.8 billion, in the process lowering its annual interest payments by about $1 billion.