GM Receives Delayed $5.4 Billion Loan Payment
After a five-day delay, GM said Wednesday that it had received the $5.4 billion it had expected to receive last week. GM COO Fritz Henderson said Tuesday night at the Automotive News World Congress that if the General didn’t get the second installment of the $13.4 billion loan promised by the Bush administration, it would run out of cash before the end of March.
Although it was originally expected last Friday, the funds were delayed by the government changeover this week, as Bush passed the Presidential baton to Obama. GM has now received a total of $9.4 billion in loans from the government-excluding the $5 billion GMAC received as a result of the government acquiring preferred shares of the financial arm, and an additional $1 billion given to GM to invest in GMAC. The last $4 billion installment of the $13.4 billion pledged by the U.S. Treasury will be released on February 17th, provided GM submits a viable restructuring plan to Congress by then.
With the new Obama administration quickly taking over Washington, it will be interesting to see how the new government will tackle the issue of the ailing domestic auto industry. Obama has been a supporter of financial aid to the industry, given that the recipients make appropriate concessions-but up until Tuesday he was relatively powerless to push his agenda. Given his affinity for change and vision of an oil-independent America, GM and the domestic industry are undoubtedly preparing for a major shakeup.