GM to make 2nd government loan payment by March 31

[March 26, 2010]  DETROIT (AP) -- General Motors Co. said Thursday that it will make another $1.2 billion loan repayment to the U.S. and Canadian governments by the end of this month.

It will be the company's second payment on $6.7 billion in loans from the U.S. government and $1.4 billion owed to the Canadian and Ontario governments.

The automaker will pay $1 billion to the U.S. Treasury and $192 million to the two Canadian governments, GM spokeswoman Noreen Pratscher said. GM made the same payments to the governments in December and had pledged to make quarterly payments as its cash flow improved.

New GM Chief Financial Officer Chris Liddell said last week that the company still hopes to repay the entire $6.7 billion before June.

Sometime late this month GM plans to release fourth-quarter earnings and earnings for last year excluding its stay in bankruptcy protection.

GM received $52 billion in aid from the U.S. government as it ran out of cash and was forced into bankruptcy protection last year. After it repays the $6.7 billion, it would still owe the government $45.3 billion. The company plans to repay as much of that as possible with the proceeds of a public stock offering.

The U.S. government currently owns about 61 percent of the Detroit automaker, which came in exchange for the aid.

GM posted a $1.2 billion loss for the third quarter, but said it was generating cash and it felt comfortable committing to the repayment. Ray Young, chief financial officer at the time, said the government placed $16.4 billion of GM's money into a contingency fund in case sales worsened or other problems cropped up. GM doesn't need the contingency money and can repay a portion to the government, he said.

Liddell said last week that GM stands a reasonable chance of making a profit this year, due in large part to structural costs that were dramatically reduced during bankruptcy. CEO Ed Whitacre Jr. has said the repayments would come from a combination of government dollars and cash generated by the company.

GM executives said they will start offering stock when the market conditions are right, perhaps later this year.

[Associated Press]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.