General Motors’s financial position has been strengthening recently — in addition to an encouraging initial public offering, the company announced this week it has managed to pay off another $5 billion in debt.
The vast majority of that payout comes from GM’s obligations to pension funds. GM announced the payments last month, saying it would put nearly $2.7 billion towards its hourly pension plan, and another *** billion towards pensions for its salaried employees. The payments were deemed necessary after GM discovered last year that its U.S. pension programs were underfunded by roughly $17.1 billion.
“This pension contribution puts us another step closer to our goal of fully funding our pensions plans and achieving minimal debt,” said Chris Liddell, GM CFO, in a released statement. “With a healthy balance sheet, a lower cost structure, and a focus on revenue generation, we continue to put in place the fundamentals for sustainable success.”
The additional $1 billion payment is relatively removed from the company’s North American operations. GM announced yesterday it was paying off the last half of a $2 billion loan extended to its GM Daewoo subsidiary, which purportedly helped facilitate a management shift and stabilize the firm during GM’s bankruptcy proceedings.
Source: GM, Automotive News (Subscription required)