GM begins to pay back loans
Canada to get $192 million in initial reimbursement
General Motors Co. says it lost $1.2 billion US from the time it left bankruptcy protection through Sept. 30, far better than it has reported in previous quarters and a sign that the auto giant is starting to turn around its business.
The company also said it will begin repaying $6.7 billion US in U.S. government loans, with an initial $1.2-billion US payment expected in December. The repayment plan is scheduled over eight quarters, but it's possible that GM could have the entire loan paid off by June 2010, CEO Fritz Henderson said.
"Our commitment is to be accountable, to begin repaying that loan," he said. "It's important to do, it's something we can do, it's something we've agreed to do [and] that process begins now."
Of that $1.2-billion US initial payment, $192 million US will make its way to Canada, as the first phase of repaying the $1.5 billion Cdn that the company owes to the federal and Ontario governments, the company said in a release.
It was not immediately clear what percentage of the $192 million would go to Ottawa and what would go to Ontario. The loans have a scheduled maturity date of July 2015.
The company cautioned that the earnings numbers do not adhere to standard accounting rules and cover only the part of the quarter after GM left Chapter 11 bankruptcy protection on July 10.
Chief financial officer Ray Young said it's impossible to compare the third-quarter results to any previous quarter because GM is still reviewing the value of its assets and liabilities post-bankruptcy to comply with generally accepted accounting practices, known as GAAP.
"Direct comparisons are not necessarily applicable. You can make some judgments in terms of trends," Young said.
"We have significantly more work to do, but today's results provide evidence of the solid foundation we are building for the new GM," Henderson said in a statement.
Progress being made
In terms of the company's Canadian operations, Henderson declined to comment on plans for the CAMI plant in Ingersoll, Ont., a facility it shares with Suzuki. Earlier this month, the company added an extra shift to keep up with demand for Chevy Equinox and GMC Terrains, but Suzuki currently has no manufacturing presence at the site.
"We'd prefer not to comment publicly, but discussions are ongoing [with Suzuki]," Henderson said.
Despite the cautiously positive news, the company confirmed that it has no current plans to hire back any of the roughly 7,000 of workers it has recently idled.
"In terms of jobs, there is no change in status. Our production plans are set for the fourth quarter," Henderson said.
GM maintains the numbers show a company making progress, riding dramatically reduced structural costs to a far better performance than the $6 billion US loss GM reported in the first quarter, the last full quarter for which its numbers met accounting standards.
GM took in $3.3 billion US more cash than it spent for the third quarter, far better than the $10 billion US the company burned through during the first quarter.
Its third-quarter revenue totalled $26.4 billion US, also an improvement over the first quarter when it saw revenue drop nearly 50 per cent from the same period in 2008 to $22.4 billion US. Revenue was aided by sales boosts in July and August from the government's Cash for Clunkers rebates.
While acknowledging the positive impact of government incentives to induce customers to buy new cars, Henderson insists the company won't see reduced demand in future because of it.
"In the U.S., we felt the payback for [Cash for Clunkers] in September, but by October we had put that behind us."
Boost in market share
GM said its global market share was 11.9 per cent in the third quarter, up three percentage points from the first half of the year. The U.S. share stayed flat for the quarter at 19.5 per cent.
Many customers stayed away from GM showrooms in the first and second quarters, fearing the company wouldn't be around to honour warranties and service their vehicles.
"To the extent that our announcement helps [with consumer confidence] then great, but that's really more about what's happening in their daily lives," Henderson said.
With files from The Associated Press