GM Generates $3.3 Billion, Will Start Repaying Loans - Except to American taxpayers.

http://www.bloomberg.com/apps/news?p...2XrN_eJ0&pos=2

Nov. 16 (Bloomberg) -- General Motors Co., signaling confidence in its
recovery from bankruptcy, said it generated $3.3 billion in cash in the
third quarter and plans to start repaying government loans early.

Cash on hand was $42.6 billion at the end of September after a
restructuring engineered by the Obama administration, and GM reported
progress in cutting jobs and shutting dealers. The loss since leaving
Chapter 11 on July 10 was $1.15 billion, GM said today.

The results offered the first glimpse of Detroit-based GM’s financial
performance since shedding the remnants of the old General Motors Corp.
on July 10 under Chairman Ed Whitacre and Chief Executive Officer Fritz
Henderson.

“The numbers are encouraging,” Maryann Keller, president of consultant
Maryann Keller & Associates, told Bloomberg Television. “What it
demonstrates is that the government gave GM a reorganized balance sheet
that made them more competitive.”

GM’s 8.375 percent bonds maturing in 2033, which will convert into
equity in the new company, jumped 3.63 cents to 21.3 cents on the dollar
at 3:34 p.m. in New York, according to Trace, the bond-price reporting
system of the Financial Industry Regulatory Authority. That was the
highest price since January.

Cash Drain

Headwinds this quarter will include a cash drain as the loan repayments
begin and from a U.S. auto market that will be 8.5 percent smaller than
in the previous three months, GM said. The U.S. government is owed $6.7
billion and also owns a 61 percent stake in the biggest domestic
automaker, which said it still expects an initial public offering in
2010’s second half.

Third-quarter revenue was $28 billion, including $26.4 billion for the
post-bankruptcy period. GM reported unaudited data for July 1 through
July 9 for General Motors Corp., and for the period since July 10.

“We are ahead of the bankruptcy plan, not only in operations, but with
some contingencies we provided for that we have been able to manage,”
Henderson, 50, said in a Bloomberg Television interview.

GM’s results don’t compare directly with year-earlier data because of
the bankruptcy. The pre-Chapter 11 GM lost $2.54 billion in 2008’s third
quarter, its best three-month period last year. GM amassed $88 billion
in losses from 2004 through the first quarter under former CEO Rick
Wagoner, who was asked by the government’s auto task force to step aside
in March.

Repaying Loans

Borrowing from the U.S., Canadian and Ontario governments will be repaid
in quarterly installments from escrowed funds, beginning in December
with an initial $1.2 billion payment, GM said. GM filed for bankruptcy
on June 1, and the loans had a scheduled maturity date of July 2015.

“This is as much about management confidence as it is about consumer
confidence,” Henderson said. “I’ve been asked probably a hundred times,
‘When are you going to start paying back the taxpayer?’ The answer is
now.”

The repayment pledge was telegraphed last week by Whitacre, 68, who
raised the possibility in an interview. Named by the auto task force to
lead GM’s revamped board, the former AT&T Inc. chairman and CEO said he
has been prodding executives to “hurry every chance we get” to fix GM.

‘Fire Lit’

“This company does seem to have a fire lit under it and is making
decisions faster,” said auto consultant Keller, who is based in
Stamford, Connecticut.

Henderson said it was “my mission” to disprove a Sept. 9 government
report predicting that the Treasury would be unlikely to recover all of
the estimated $85 billion in federal aid provided to GM and Chrysler
Group LLC.

GM would need to reach a market value of about $68 billion, more than
its $57 billion peak in 2000, to fully repay the government, the
Congressional Oversight Panel said.

“Our objective is to be ready to go in the second half of next year”
with an IPO, Henderson said, adding that all of GM’s shareholders want
to sell their stakes. Besides the U.S. government, the stockholders are
the governments of Canada and Ontario, a union retiree trust and the old
GM.

Fourth-Quarter Outlook

Cash on hand at the end of the fourth quarter will be “materially lower”
than on Sept. 30 because of costs that will include $8.3 billion to help
cover the loan repayments and $2.8 billion for the settlement of the
bankruptcy of former parts unit Delphi Automotive LLP, GM said.

Debt totaled $17 billion at the end of the third quarter, including the
U.S. government loans and $2.7 billion owed to the Canadian and German
governments, and $7.6 billion in other debt. The amount doesn’t include
$12.2 billion in notes or preferred stock that will be owed to union
retiree health care funds in the U.S. and Canada, GM said.

The automaker had $94.7 billion in debt as of July 9, before emerging
from bankruptcy.

After getting an emergency loan from Germany to prop up the Opel unit in
Europe, GM decided this month to keep the division, and the automaker is
repaying those funds as well.

The European business lost more than $400 million last quarter, while
“Asia-Pacific, Latin America, Africa and the Middle East were solidly
profitable,” Henderson said on a conference call.

Employees, Dealers

Employment fell 14 percent to 209,000 globally at the end of September,
from 243,000 at the end of December, GM said. The U.S. salaried
workforce was cut 7 percent to 27,000 in the same period and hourly
employees declined 23 percent to 48,000. GM also said it spent $132
million related to 1,700 employees accepting early retirement in the
U.S., Germany and Australia.

GM has reached closure agreements with 2,042 dealers as of the end of
October, the automaker said. In the July 10 through Sept. 30 time frame,
GM reported charges of $320 million related to its plan to thin the
ranks of its franchisees.

Global production fell 17 percent to 1.7 million cars and trucks, from
2.04 million a year earlier, as a decline in North American offset a
gain in the rest of the world. Third-quarter revenue was less than the
$30.9 billion of Ford Motor Co., the second-biggest U.S. automaker by
unit sales.


--
Nancy Pelosi, Democrat criminal, accessory before and after the fact to
Rangel's tax evasion.