Photo of a person handing someone else money.
GM could take years to payoff its debt to the government. CC by quaziefoto/Flickr

From riches to rags to riches again seems to be the story about General Motors. The company had to take billions in loans from two governments, the U.S. and Canada. However, GM is starting to become profitable again. While in the midst of a brief period of bankruptcy protection, General Motors has begun shedding the underperforming brands. There was a lot of turmoil in the office as well. GM has a new executive, again. Despite the company having started a return to health, it still owes a hefty sum to the federal government. The new CEO of GM doesn’t believe the IPO will pay off the loans.

GM debt may not get paid off

General Motors has had a busy summer. The company got a new CEO and announced it would file for an initial public offering. The company filed the paperwork, and the government is still the majority shareholder. About 61 percent of GM stock is held by the government. Those shares will get converted and sold to investors in an IPO. That is how the government will get paid back. General Motors, according to the New York Times, does not think the auto bailout loans will be able to be repaid all at once.

Gm needs to prove its viability

In order for the company to prove that a couple of solid quarters are not just a fluke, there has to be a track record of profitability. The new Chief Executive of General Motors, Daniel Akerson, immediately claimed that selling all of the shares the government holds at once is not a feasible goal. He was completely open about it at a recent press briefing. Akerson recently held a press briefing about the upcoming IPO. That was exactly what he told a room full of reporters.

Still far to go

General Motors is down to four brands. The company is now Chevy, Buick, Cadillac and GMC. And a new CEO was not unexpected. Ed Whitacre said he would retire as soon as the company was on the right track.

Sources

NY Times: http://nytimes.com/2010/09/17/business/17auto.html?ref=automobiles

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