General Motors Co (GM) yesterday announced a loss of US$1.2 billion since emerging from bankruptcy in July, but said it would step up repayments to the US and Canadian governments of bailout aid.
The loss, through Sept. 30, is far better than previous quarters and a sign that the auto giant is starting to turn around.
GM chief financial officer Ray Young, however, cautioned that the second and third-quarter figures don’t comply with US accounting standards and shouldn’t be compared with previous earnings.
GM says it is re-valuing its assets and liabilities and should comply with accounting standards next year.
The third quarter loss announcement beat analysts’ expectations. GM said the losses came as revenues totaled US$28 billion in the quarter, US$5 billion more than in the preceding three-month period.
The company said it would begin repaying its government loans next month “in light of improving global economic conditions, stabilizing industry sales and its healthier cash position.”
It owes US$6.7 billion to the US Treasury and US$1.4 billion to Canada for aid to help it emerge as a new entity from bankruptcy.
“GM plans to repay the United States, Canadian and Ontario government loans in quarterly installments from escrowed funds, beginning next month with an initial 1.2 billion dollar payment to be made in December followed by quarterly payments,” the company said in a statement releasing preliminary financial results.
GM said it has begun repaying German state aid for its Opel division and will pay off the remaining debt by the end of the month.
“The company has begun to repay the German government loans which were extended to support Opel, and had a balance of 900 million euros [US$1.34 billion]as of September 30, 2009,” the GM statement said.
“Opel has already repaid 500 million euros of that in November, and will repay the remaining 400 million euro balance by the end of the month,” GM said.
The company would be on track to pay off the US$6.7 billion US debt and a US$1.4 billion debt to Canada by the middle of 2011, well ahead of a mid-2015 deadline to repay the two governments.
The government debt represents about 13 percent of the US$52 billion that US taxpayers have invested in GM, the majority of which was exchanged for a 61 percent ownership stake in the company.
Even if GM pays back all its loans early, government investigators have questioned whether taxpayers will recoup their full investment in GM and fellow bailed-out automaker Chrysler Group LLC.
GM, which exited bankruptcy as a new privately held company on July 10, has said it hopes to sell stock to the public late next year so taxpayers can recoup at least part of their remaining investment.
However, a US Government Accountability Office report issued earlier this month said that the automakers’ share values would have to soar to levels they didn’t even approach when they were healthier for the US$80 billion in taxpayer loans to be completely repaid.
The automaker will draw on about US$13 billion that remains deposited in escrow by the government to help make the payments.
GM chairman Ed Whitacre said last week that GM was committed to repaying its government loans.
“Can GM pay back its loans? You bet,” Whitacre said during an address at Texas Lutheran University. “I can’t tell you when, but it won’t be very long.”
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