GM’s Debt Far From Paid In Full

GM’s CEO Ed Whitacre has made the announcement in ads running on all major networks, that his company has paid back its government loan “in full, with interest, years ahead of schedule”. But is that actually true? Not according to an article recently published in Forbes.

GM was given $49.5 billion last summer in aid to finance its bankruptcy. But only $6.7 billion was shown as a loan, the vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company. When Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion — the loan and the equity.

As it turns out, $13.4 billion of the aid money was “working capital” in an escrow account when the company was in bankruptcy. The company is using this escrow money — government money — to pay back the government loan.

Small manufacturers who have made painful decisions and cuts to allow their companies to survive economic downturns have to shake their heads as they hear Whitacre boast of GM’s modest loan payment…made with their tax dollars.