GM says IPO could help start paying back U.S. government in 2010

According to General Motors Company’s Chief Financial Officer, Ray Young, the automaker could start using proceeds from an initial public stock offering by as soon as 2010 to pay back some of the money it owes the governments of the United States and Canada. He said that GM would move toward positive cash flow and profitability quicker than planned if U.S. auto sales recover in 2010.

“Naturally we would love to go faster and I’m sure the new GM board will push us to see whether we can accelerate these plans and actions,” Young told Reuters. “We’re forecasting some modest recovery in 2010 in the United States but at this juncture it’s hard to predict what will happen in 2010.”

The new General Motors Company is owned 60.8 percent by the U.S. Treasury and 11.7 percent by the government of Canada and Ontario. GM also owes $8 billion to the U.S. and Canadian governments under loans that mature in 2015.

“To the extent that we do an IPO, whereby, let’s say the government sells some of their shares but we also issue some new shares, those proceeds could be used to repay part of the US Treasury and Canadian government loans,” Young said.

– By: Omar Rana

Source: Reuters