Wednesday, April 21, 2010

GM - Reading the Whole Story

A friend of mine sent me the GM press release today, amazed that they'd "paid back the government" in full and ahead of schedule.  Wow. That would be pretty amazing.  Let's go to the release:

"General Motors Company Chairman and CEO Ed Whitacre today announced that GM has made its final payment of $5.8 billion to the U.S. Treasury and Export Development Canada, paying back its government loans in full, ahead of schedule..."GM is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse we build here in Fairfax," said Whitacre. "We are now building some of the best cars, trucks, and crossovers we have ever built, and customers are taking note.  Our dealers are increasing their sales, we are investing in our plants, and we are restoring and creating jobs."

Of course, what the GM press release doesn't make any mention of are the details:

"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. At first the entire amount of U.S. aid was considered a loan as the government tried to keep GM from going under and pulling the fragile economy into a depression.

But during bankruptcy, the U.S. government reduced the loan portion to $6.7 billion and converted the rest to company stock, while the Canadian governments held $1.4 billion in loans. Those loans were repaid Tuesday, five years ahead of schedule.

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. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent."

So just to be clear - the US Government gave GM over $50 BILLION dollars, and GM promptly declared bankruptcy, wiping out most of this "debt," save for $6.7B of it, and converting the rest to equity.  Then, GM paid back this $6.7B in "loans," and the US Government is left holding 61% of GM's equity.  It's probably a little bit of a stretch to say that GM has paid back its government loans in full...

The Government also still owns $2.1B in GM preferred stock.


scharfy said...

This is worth noting. GM actually exporting cars...

GM auto sales in China

Kid Dynamite said...

MISH has more here:

he says GM's pension plan is still underfunded by $27B!!! i thought that was one of the main points of their bankruptcy proceedings - to clear that up...

But What do I Know? said...

It's a shame that the MSM can't openly parse the BS like bloggers can. I thought something sounded funny about this whole "story" when I heard it yesterday. Good work, KD!

CrocodileChuck said...


The total bailout amount is not complete-GM extorted, er, 'received' A$6B from the suffering Australian taxpayer:

Whadday reckon they got from Merkel for Opel??