GM ready to pay its dues

General Motors, the car giant driven to bankruptcy by the global recession, will begin paying back bailout money from the US government as early as next month.

The company said it lost US$1.2 billion in the period from July, when it emerged from bankruptcy protection, to the end of September. It was a figure that delighted investors and prompted some fighting talk from management. Forecasts had predicted a much worse figure.

The Government Accountability Office in Congress said earlier this month that the US taxpayer was never likely to recoup its investment in GM. But GM's CEO Fritz Henderson used yesterday's results announcements to say: "It is my mission to disprove the GAO."

And he added later: "I've been asked probably a hundred times, 'When are you going to start paying back the taxpayer?' The answer is now."

Analysts pointed out that the (northern) summer months covered by GM's first post-bankruptcy results coincided with the US government's US$3 billion cash-for-clunkers rebate scheme which subsidised new car purchases by drivers.

And the money to buy back the government-owned bonds is coming from an escrow account set up using taxpayers' money. GM has not needed to dip into these contingency reserves to the extent first predicted because it has needed to bail out fewer suppliers than forecast.

The US government owns 61 per cent of GM. It has US$6.7 billion of GM bonds, while the Canadian authorities have US$1.4 billion of bonds outstanding. Henderson said he would put US$1.2 billion per quarter towards paying back those bonds, and could even accelerate repayment if economic conditions continue to improve, clearing taxpayer debt by next year.

GM is pencilling in a public offering of shares in 2010 allowing the US government to cash in some of its stake. Some of GM's international operations are growing. It sold 478,000 vehicles in China in the third quarter, up 6 per cent.

- INDEPENDENT