General Motors Co. said Monday that it plans to start repaying government loans early.
Borrowing from the United States, Canadian and Ontario governments will be repaid in quarterly installments from escrowed funds, beginning in December with an initial $1.2 billion payment, GM said.
"This is as much about management confidence as it is about consumer confidence," Chief Executive Fritz Henderson said. "I've been asked probably a hundred times, 'When are you going to start paying back the taxpayer?' The answer is now."
The U.S. is owed $6.7 billion and also owns a 61% stake in the biggest domestic automaker, which said it still expects an initial public offering in the second half of 2010. GM filed for bankruptcy June 1, and the loans have a scheduled maturity date of July 2015. Cash on hand at the end of the fourth quarter will be "materially lower" than on Sept. 30 because of costs that will include $8.3 billion to help cover the loan repayments and $2.8 billion for the settlement of the bankruptcy of the former parts unit Delphi Automotive LLP, GM said.
Debt totaled $17 billion at the end of the third quarter, this was made up of the U.S. government loans and $2.7 billion owed to the Canadian and German governments, and $7.6 billion in other debt. The amount does not include $12.2 billion in notes or preferred stock that will be owed to union retiree health-care funds.