GM to Repay Government Debt by June, New CEO Says
General Motors plans to repay roughly $8 billion in debt to the United States and Canada by June, a faster payback of the first portion of its bailout than the automaker previously committed to make.
"We intend to pay the debt," GM's Chairman and acting Chief Executive Ed Whitacre said Tuesday. "We'll be done by June."
The comments by Whitacre marked the first time GM committed to repaying its government loans within a year after it filed for bankruptcy in a restructuring steered by the Obama administration.
Whitacre, who became CEO two weeks ago when the board split with former Chief Executive Fritz Henderson, said he was not sure how long he would serve as the automaker's top executive. "I'm enjoying it," Whitacre told reporters when asked about his new role as acting CEO.
Whitacre met reporters for the first time since becoming CEO and in the board room at the automaker's Detroit headquarters, where Henderson's career ended suddenly earlier this month.
Whitacre said he did not intend to stay for long as CEO, but had not set a time for stepping aside with GM's 12-member board.
His pay as CEO will be discussed by the compensation committee of GM's board next year. "Do I want to do it long term? I told the board no, but I haven't defined that. I can't even define that myself," Whitacre said.
He expected to announce a new chief financial officer to replace Ray Young, who is being transferred to GM's Shanghai-based international operations within two weeks. No candidates for a permanent CEO have been identified yet and the search for an outside candidate could be complicated by pay restrictions set by the U.S. Treasury.
"We can't pay people a whole lot of money here, so that focuses you a little bit more internally," Whitacre said.
Split Over Opel
He said GM's board differed with Henderson on whether the automaker should sell its European Opel unit, but a range of considerations had led directors to conclude it was time for new leadership.
Henderson became CEO in March when his predecessor, Rick Wagoner, was ousted by the Obama administration. "I think the board wanted to change things, do things a little differently, go in a different direction," Whitacre said.
On Opel, while Henderson argued for a sale, the board had favored keeping the unit, a position it announced in a reversal of its previous stance at a meeting of directors in early November.
GM had been widely expected to complete a sale of Opel backed by the German government to a Russian-backed group led by Canadian auto-parts supplier Magna International Inc .
"The board disagreed with Fritz on Opel. I don't think that's any secret," he said. "The board looked at it and said this is a valuable asset. Why should we sell it for something that probably wasn't enough money when we can do something with it. We just disagreed and the board wanted to have Opel."
In another break with the turnaround strategy advanced by Henderson, Whitacre said he had no timetable for a relisting of GM shares through and initial public offering.
Henderson had said an IPO would be possible as early as the second half of 2010. "We don't have a specific time frame for an IPO. We have some things we have to do internally. We have to produce results," Whitacre added.
Paying Back Taxpayers
GM said last month it would begin making quarterly payments in December of $1.2 billion to the U.S. Treasury and the governments of Canada and Ontario.
The automaker said then it would make the payments from a $13 billion escrow account containing cash left over from the government bankruptcy financing that established a new company in July.
An Obama administration official said last month the U.S. Treasury would review GM's payment schedule in June to consider how quickly taxpayers would be repaid. Most of the $50 billion in government support for GM was converted into equity in the automaker.
Under Henderson, GM said it would begin making quarterly payments of $1 billion on a $6.7 billion loan to the U.S. Treasury. Another $200 million per quarter was earmarked for quarterly payments starting in December to Canada.
When GM has paid off its $8.1 billion in government debt by June, it will have cut its current $17 billion debt almost in half. The automaker previously said it could then seek a private line of credit from banks.