GM pays off its bailout loans

By Peter Valdes-Dapena, senior writer


NEW YORK (CNNMoney.com) -- General Motors has made a final payment of $5.8 billion to the U.S. and Canadian governments, paying off the last of its $6.7 billion in loans, the company said Wednesday.

"I am very pleased to announce that, as of today, General Motors has repaid, in full and with interest, the loans made last July by the U.S. Treasury and Export Development Canada," said GM chief executive Ed Whitacre, speaking at a plant in Fairfax, Kan., where GM builds Chevrolet Malibu and Buick LaCrosse sedans.

Whitacre also announced that GM would make two big investments for production of the next-generation Malibu: $136 million in the Fairfax facility, which will become the primary production point for the car, and $121 million in its Detroit-Hamtramck plant, which will provide additional production at times of peak demand.

GM has already begun manufacturing the Chevrolet Volt electric car in Hamtramck, where it also makes the Buick Lucerne and Cadillac DTS large cars.

On Tuesday night, the automaker wired $4.7 billion to the U.S. Treasury Department and $1.1 billion to Canada.

"GM's ability to pay back our loans ahead of schedule is a sign that our plan is working," Whitacre said.

But the loan money is only a fraction of the financial support that the federal government gave to GM over the past 12 months to stop it from going out of business.

Overall, GM received $50 billion in federal help. In return, the government got $2 billion in preferred stock and 61% of the company's privately held common shares.

Taxpayers could recoup money from a possible sale of GM stock to the public in the future.

A White House report issued shortly after GM's announcement was upbeat on the progress that both General Motors and Chrysler have made since coming out of bankruptcy but noted that the government would likely not make a profit on the funds it had invested.

"Overall, the investments made by the prior and current administration in GM, Chrysler, and GMAC will likely result in some loss, but the U.S. Treasury anticipates it to be much lower than forecast last year," the report said.

Mark Reuss, president of GM's North American operations, said in an interview with CNNMoney.com that he was "positive" that GM's stock would ultimately be profitable for taxpayers. To top of page

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