| GM to begin repaying debt to U.S. government sooner than expected |
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16/11/2009 13:23 (818 Day 02:09 minutes ago) | |||||
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The FINANCIAL -- Automaker General Motors Co. will begin paying back its debt to the United States earlier than expected. It will pay back $6.7 billion worth of U.S. government debt by the end of 2009.
The plan does not cover all of the $50 billion the United States has invested in the company, according to The Washington Post. How much the government will receive on its investment depends on GM's eventual stock value. In exchange for the $50 billion, the United States holds the $6.7 billion debt, $2.1 billion in preferred stock and a 61 percent stake in the company.
GM will announce the repayment plan Monday when it releases its preliminary third-quarter earnings results, according to a person familiar with the matter, speaking on condition of anonymity, AP wrote. The person was not authorized to speak publicly about the plan ahead of the announcement.
The Washington Post reported that the $6.7 billion debt is not due to be repaid until July 2015, but the company has exceeded projections, partly by going through bankruptcy more rapidly than it thought it would, and partly by cutting costs.
The automaker will draw on about $13 billion that remains deposited in escrow by the government to help make the payments, according to AP. 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 in Seguin, Texas, the same source reported. "I can't tell you when, but it won't be very long."
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