Distressed automaker General Motors Co. repaid its government loans way ahead of schedule and is now on a strong path to viability, the Treasury Department said on Wednesday
The Treasury confirmed that GM had repaid in full the $4.7 billion balance it owed under the government's Trouble Asset Relief Program, five years before the loan maturity date and ahead of an accelerated repayment schedule set last year.
"We are encouraged that GM has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability," Treasury Secretary Timothy Geithner said in a statement.
The company has now repaid a total $6.7 billion in debt owed to the Treasury after a bailout last year.
GM, which emerged from bankruptcy in July 2009, had pledged two weeks ago to repay the balance of loans from the U.S. Treasury and Export Development Canada "in full by June at the latest."
"This continued progress is a positive sign for our auto investment — not only more funds recovered for the taxpayer but also countless jobs saved and the successful stabilization of a vital industry for out country," Geithner said.
After the repayment, the remaining Treasury stake in GM consists of $2.1 billion in preferred stock and 60.8 percent of the common equity, the department said.
Total repayments the government's finance rescue program, known as TARP, stand at $186 billion — well ahead of last fall's repayment projections for 2010.
With this repayment, less than $200 billion in TARP disbursements remain outstanding, the department said.
"Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working," GM Chief Executive Ed Whitacre said on Tuesday in an opinion piece posted on the Wall Street Journal website.
The loans had outstanding balances of about $4.7 billion to the United States and $1.1 billion to Canada after accounting for exchange rates.
"It is also an important step toward eventually reducing the amount of equity the governments of the U.S., Canada and Ontario hold in our company," Whitacre said.
The automaker has been preparing for an eventual public offering that would allow the governments to reduce their stakes in GM and earlier in April released the first full accounting of its balance sheet as a restructured company.
GM reported a net loss of $4.3 billion for the period from its emergence from bankruptcy in July through the end of 2009, including a $3.4 billion net loss for the fourth quarter.
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