GM Reneges On Govt. Loans In Canada

[Stop It]

OTTAWA — When General Motors filed for bankruptcy protection in June, Prime Minister Stephen Harper said it was unlikely the federal government would recover the billions in taxpayers' money invested in the company.

Nearly six months since the biggest corporate bailout in recent Canadian history, that statement appears to be holding true.

In return for the combined $9.5 billion they invested in the company, the federal and Ontario governments will share an 11.7 per cent stake in GM once it emerges from bankruptcy protection.(All figures are in U.S. dollars.)

To recoup that money for taxpayers, a restructured GM would have to command a stock-market value of $67 billion, more than the company was ever worth in its heyday, according to a Canwest News Service analysis of figures provided by Industry Canada. At its peak in 2000, GM had a market capitalization of $57 billion.

Under the company's restructuring plan, GM has cut its number of brands in half, leaving it with four core brands: Chevrolet, Buick, GMC and Cadillac. The company has also shed more than $40 billion in debt from its balance sheet, while cutting labour costs to bring them more in line with those of Japanese automakers such as Toyota.

Analysts note the company faces a host of daunting challenges, including the fact that it is still losing money. Veteran auto analyst Dennis DesRosiers noted that GM has continued to lose ground in Canada, where its market share has fallen so far this year by more than four percentage points, to 17.5 per cent.

"A GM IPO is not likely to be viable unless they stop losing market share," said DesRosiers. "Quite honestly, there's no sign they can stop their market-share losses."

The Canwest News Service analysis was based on methodology used by the U.S. Government Accountability Office (GAO), the U.S. Congress budget watchdog, in a report earlier this month. The GAO also concluded that GM would have to reach a market value of $67 billion for the U.S. government to recover its investment.

In addition to the 11.7 per cent ownership stake, Canada and Ontario will receive $403 million in preferred shares from the new GM, while lending $1.3 billion to GM Canada.

Industry Canada officials would not provide details of the loan terms, but documents filed with the U.S. Securities and Exchange Commission indicate the loan matures in July 2015 and pays an annual interest rate of as much as seven per cent.

Chrysler Group, which also received bailout funds from the Canadian and Ontario governments, said this week it planned to repay the public funds by 2014 under a revival plan unveiled by the automaker's European partner, Fiat.

© Copyright (c) Canwest News Service

[La Verdad]

The company is still losing money, that's what I walk away with after reading this article.

[Stop It]

La Verdad wrote:

The company is still losing money, that's what I walk away with after reading this article.

That's a foregone conclusion, at least at this stage.
Recovery is clouded by a huge debt load, behind in relevant product development for today's market, and production costs which are still too high.plus the capitalization target GM has to attain to stay solvent is for practical purposes, unattainable.
Chrysler seems to have more of their their ducks in a row thanks to Fiat, but they have even more challenges in product relevance.
At least Chrysler has a commited plan to repay their loans to the CDN Govt. GM, apparently, isn't intending to do so.
This piece of news about GM has ominous overtones--but the peanut gallery which rules the roost here will undoubtedly dismiss it as irrelevant, or just ignore it and instead pursue their usual buffoonery.
However, this news is, for a change, the unembellished truth.
Let the peanut gallery weep, wail, and gnash their teeth as usual---they can't deny it this time under any circumstances.

[La Verdad]

Compounded by the fact that GM's new CEO was not given a vote of confidence by the Chairman.

According to Whitacare, GM is still the old beuracracy. More of the same, yawn yawn.

[Stop It]

La Verdad wrote:

Compounded by the fact that GM's new CEO was not given a vote of confidence by the Chairman.
According to Whitacare, GM is still the old beuracracy. More of the same, yawn yawn.

Evidently the new chairman is a product of the old beurocracy.

[Stop It]

La Verdad wrote:

Compounded by the fact that GM's new CEO was not given a vote of confidence by the Chairman.
According to Whitacare, GM is still the old beuracracy. More of the same, yawn yawn.

I believe the new CEO is a product of the old beurocracy as well.

[The Authority]

Stop It wrote:

<quoted text>
I believe the new CEO is a product of the old beurocracy as well.

Oh but of course, the old beurocracy put him into place as COO before he took the reigns. Obama's auto czar said that Fritz was "visually excited" when offered the opportunity to run GM. Of course he was excited, he rose to the top of the stinky pile, and can continue to pick from the bones of the company.