GM plans to pay their loans back early, but they're still nowhere near being out of the woods. Find out more inside.
GM will repay $5.8 billion in loans from the U.S. and Canadian governments as early as today. This will square GM's loan-based debt with the two governments, though the U.S. Treasury will continue to own over 60% of the automaker while the Canadians own 12%.
This is due to the U.S. government's conversion of $43B out of $50 billion in bailout funds into equity. The Canadian government traded $8 billion into a stake in GM. $4.7 billion will go to the Americans, with $1.1 billion headed to Ottawa.
General Motors is making the repayment roughly two months ahead of schedule, with a formal announcement expected on Wednesday when GM chief Ed Whitacre visits a factory in Fairfax, Kansas. Whitacre may also announce an expansion of the Kansas facility, with added investment and an increase in hiring.
GM is attempting to create a wave of public and investor confidence in the long-suffering automaker. The company is working out plans to sell stock in an initial public offering, and a better reputation will help launch the stock at a higher price point. Once this happens, the U.S. and Canadian governments will be able to sell off their ownership in the automaker in the hopes of getting their money back.
The American manufacturer lost $3.4 billion in the last three months of 2009, though this was better than many analysts had expected.