General Motors Co posted a third-quarter loss on Monday but said stabilising sales and lower costs since its bankruptcy would allow it to begin paying down $8.1 billion in government debt to the United States and Canada next month. GM said it expected to repay its debt to the US and Canadian governments by the end of 2011 and could opt to move faster by refunding money left over in an account created by the Obama administration to finance GM's fast-track sale out of bankruptcy in July.
Chief Executive Fritz Henderson said the damage to GM's business from a volatile quarter had been less damaging than feared. "The underlying business, relative to the projections that we had going into bankruptcy, has actually performed better," Henderson told reporters. GM posted third-quarter sales of $28 billion in preliminary financial results released on Monday. Sales were down 26 percent from a year earlier. The results were not prepared according to generally accepted accounting principles and were not comparable to past results. GM has lost $88 billion since 2005.
For the period after it emerged from bankruptcy on July 10 until the end of the third quarter, GM posted a net loss of $1.2 billion. For the whole of the third quarter, the automaker had an operating loss before interest, taxes and special items of $888 million. The company's global share of auto sales slipped to 11.9 percent in the third quarter compared with 13 percent a year earlier. GM's US share was 19.5 percent, down from 24.3 percent a year earlier.
"There are some signs of stability," Henderson said. "But when you come away from it, we lost money. It's certainly not satisfactory." GM said it would begin making $1 billion quarterly installment payments on its $6.7 billion US government loan in December. At the same time, GM will start repaying a $1.4 billion loan from the governments of Canada and Ontario with quarterly payments of almost US $200 million. GM had not been required to make payments on the US loan before it matured in July 2015.
The US government extended almost $50 billion in financing to GM but agreed to convert most of that balance into a 61 percent equity stake in the automaker. A congressional oversight panel said the US government was unlikely to recover all of the financing it provided GM.
The automaker ended the third quarter with $17.4 billion in a special account created with the bankruptcy financing provided by the US government. GM said it had allocated $8.1 billion from that account to pay down the government debt. GM is in the process of revaluing its balance sheet after bankruptcy. That process of readying "fresh start accounting" is a step toward an eventual IPO for the automaker.