GM makes $4B cash payment to pension plans
General Motors Co. took another step toward cleaning up its balance sheet Thursday when it pumped $4 billion in cash into its underfunded U.S. pension plans.
The company made the payment two weeks after a historic initial public stock offering that was worth a total of $23 billion, and it comes just 17 months after the automaker exited a government-funded bankruptcy restructuring.
GM said in October it would pay $6 billion into its pension plans, which worldwide were $27 billion short of their obligations at the end of last year. Of the $6 billion, $4 billion was to come from GM’s cash reserves and $2 billion from shares of common stock.
The company said Thursday it paid $1.3 billion into the U.S. salaried-worker pension plan and $2.7 billion to the plan for U.S. hourly workers. The U.S. plans, which pay benefits to 688,000 people, were $17.1 billion short of their obligations at the end of last year.
“This pension contribution puts us another step closer to our goal of fully funding our pension plans and achieving minimal debt,” Chief Financial Officer Chris Liddell said in a statement.
Company spokeswoman Renee Rashid-Merem said no schedule has been set for the company to make the stock payment into the plans, although GM wants to do it as soon as possible.
GM’s pension plans likely are closer to meeting their obligations because of growth in the stock market during the past year. Rashid-Merem said the plans’ value will be recalculated again at the end of this year.
Also Thursday, the Treasury Department received an additional $1.8 billion in net proceeds from the sale of additional stock in General Motors.
Treasury said the revenue received Thursday brought the total amount the government has earned from the initial public offering of GM stock to $13.5 billion.
Treasury had said last week it expected to earn an additional $1.8 billion if the bankers who handled the IPO exercised their full options to purchase an additional 53.8 million shares of GM common stock.
The government put $49.5 billion into GM as part of its bailout of the giant automaker.