General Motors Co, preparing for an initial public offering, is showing a different spirit than the failed behemoth that preceded it: Investing in small cars, planning to hire workers and paying obligations early.
GM yesterday said it’s investing in a Michigan factory to make a small Cadillac and hire 600 workers. Hours later, it said it paid $2.8 billion to its union retiree health-care trust and obtained $5 billion in credit that it may not need. After the IPO, the Detroit-based auto maker said it will buy back preferred shares from the US and put $6 billion in its pension plans.
The rapid-fire moves show how GM will operate under new Chief Executive Officer Dan Akerson after the nation’s largest automaker purged much of its debt and lowered its fixed costs by restructuring in bankruptcy.
“What happened over the past 12 months was ordained by the courts,” said Maryann Keller, an auto industry consultant with a self-named firm in Stamford, Connecticut. “The measure of how good a company GM is starts now. They have to show that they can operate this business by cleaning the balance sheet and investing in the business.”
Meanwhile, in a series of moves that pave the way for an IPO and strengthen its finances, GM said it would repay $2.1 billion to US taxpayers and make early payments to pension and retiree health plans. It has filed its registration statement for the offering with the Securities and Exchange Commission.