Saturday, January 29, 2011

GM drops request for $14.4B in U.S. loans

DETROIT — General Motors Co. is withdrawing its application for $14.4 billion in low-interest loans from the Department of Energy, saying it has enough liquidity to modernize its plants itself to build fuel-efficient vehicles.

The move is part of GM's plan to eliminate most of its debt and fully fund its pension plans. After receiving $50 billion in government aid in 2008 and 2009, the post-bankruptcy company has prioritized self-sufficiency, design chief Ed Welburn said Thursday at the Washington auto show.
"We're confident of our progress and the strong global performance of our company," Welburn said. "We are committed to keeping our financial house in order."

GM originally applied for a $10.4 billion loan in August 2008, Welburn said. The company's 2009 taxpayer-funded bankruptcy nullified that request, so GM reapplied in October 2009, this time for $14.4 billion in government loans.

But GM now has more than $20 billion in liquidity and successfully returned to the stock market in November, decreasing the U.S. government's ownership from 61 percent to about a third. So GM plans to fund the planned factory improvements itself, instead of using the Department of Energy loans.

"I think we're in a very different position today than we were then," Welburn said. "I would certainly think that the American public would feel better about that."

Ford Motor Co. is the only Detroit automaker to restructure without a federally funded bankruptcy, which boosted consumers' perception of the company. The Dearborn, Mich.-based automaker has already received approval to use $5.9 billion of the $25 billion Energy Department loan program, aimed at manufacturing of high-tech, fuel-efficient vehicles.

Chrysler, which also received federal funding for its 2009 bankruptcy, is still waiting to hear the results of its application for the green manufacturing loans.

Congress passed the Energy Department loan program in December 2007. Along with the Ford loan, the Energy Department also has approved $1.6 billion to Nissan Motor Co., $528.7 million to plug-in hybrid startup Fisker Automotive Inc. and $465 million to California electric-vehicle maker Tesla Motors Inc.

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