GM posts loss, vows to repay US debt early

GM posts loss, vows to repay US debt early

Detroit: General Motors Co posted a third-quarter operating loss on Monday but said stabilizing sales and lower costs since its July bankruptcy would allow it to begin paying down $6.7 billion in US government debt ahead of schedule.

The automaker said it would begin making $1 billion quarterly instalment payments on its US government loan in December. At the same time, the automaker will start repaying a $1.4 billion loan to Canada, making a payment of almost US$200 million.

GM had not been required to make any payments on the US loan before it matured in July 2015.

For the third quarter, GM posted a loss of $888 million before special items, interest payments and taxes.

GM, which slashed almost 70% of its debt in a bankruptcy funded and directed by the US government, posted third-quarter sales of $28.0 billion in preliminary financial results released on Monday.

The sales results were down 26% from a year earlier but up 21% from the second quarter when the automaker was struggling to conserve in the run-up to its June bankruptcy filing.

The financial results were not prepared according to generally accepted accounting principles and were not directly comparable to past results for the automaker, which has lost $88 billion since 2005.

The US government extended almost $50 billion in financing to GM but agreed to convert most of that balance into a 61% equity stake in the automaker.

A congressional oversight panel said the US government was unlikely to recover all of the financing it provided GM.

The automaker ended the third quarter with $42.6 billion in cash and $17.4 billion in a special account created with the bankruptcy financing provided by the US government.

It said it had allocated $8.1 billion from the bankruptcy escrow account to pay down the government debt.