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GM eyes IPO, vows to pay
back loans in full by June

DUBAI — General Motors said on Sunday that it was on track towards reviving its fortunes this year as it readies to repay the final tranche of loans owed to the US and Canadian governments by June this year before embarking on an initial public offering, a top executive of the embattled auto giant said 
on Sunday.

Backed by an expected strong performance in the coming months, the auto-giant which was bailed out last year with huge cash injections by the US and Canadian governments, is expecting to go public by late this year to pay off the debts, Tim Lee GM Vice President and President of its 
International Operations.

In Dubai on his first visit after taking over as the GM’s international operations, Lee also confirmed that GM would be “winding down” its Hummer brand in the wake of a failed acquisition bid by Sichuan Tengzhong Heavy Industrial Machinery Co of China.

Speaking to media at a roundtable meeting in Dubai, Lee said GM was no more manufacturing Hummer. But “we have some inventory that we want to sell.”

Hummer is the latest brand from GM stable that is being scrapped after Pontiac, Oldsmobile and Saturn range.

The automaker, however, pledged to provide all Hummer owners in the Middle East with parts and service for up to 10 years. “We have $16 million worth of parts to service around 400 Hummer buyers in this market,” said John Stadwick, the new managing director of GM Middle East operations.

Mike Devereux, the outgoing managing director of GM Middle East, said the recent recall of vehicles due to possible steering problem in models including Chevrolet Captiva and Cruze and GMC Terrain was done in a transparent and customer-friendly way. The automaker is also giving the UAE government an update on the latest developments.

Lee said GM hoped to repay the entire loan before June. As of the end of March, GM has paid back $2.4 billion on $6.7 billion in loans from the U.S. government and $1.4 billion owed to the Canadian and Ontario governments.

GM also received $52 billion from the U.S. government in return for a 60.8 per cent stake in the new firm under the bankruptcy restructuring. After it repays the $6.7 billion, it still would owe $45.3 billion. The company plans to repay as much as possible using proceeds from a public stock offering, said Lee.

Canada, which provided $9.1 billion in loans, has an 11.7 per cent stake and a United Auto Workers union retiree healthcare trust fund holds 17.5 per cent, Lee said.

“The best days are ahead of us as we emerge from bankruptcy with a strong product offer around the world and,” he said. “Going forward, we will create value for customers in terms of price, reliability and durability and reinforce the Chevrolet brand.”

On asked when the company expects to come out of the red, Lee said “watch out for our first quarter results in May. You will see.” GM reported a $4.3 billion net loss on revenues of $57.5 billion in the second half 2009.

The Detroit-based auto-maker has high expectations on India market where it is setting up a light commercial vehicle plant in partnership with its Chinese joint venture firm SAIC. The new range, is expected to roll out in 12 to 18 months, is expected to give GM big push in the under-represented commercial vehicle space, which is currently 40 per cent of the market. The much-vaunted Chevrolet Volt plug-in electric sedan, on which GM pins much hope will be game-changer, will debut in the Middle East by 20011-12, Lee said.

GM Middle East sales slumped to 117,000 units in 2009 from 144,000 in the previous year. In the first quarter 2010, with GM sales reaching 25,000, the carmaker is targeting to sell 120,000 units this year, said Stadwick. 
— issacjohn@khaleejtimes.com