June 30, 2009

Analysts: GM investment is long term

The U.S. government's $50 billion investment in General Motors Corp. will take years to recoup under the best of circumstances, industry analysts said.

GM filed for bankruptcy on June 1 and is expected to emerge as a smaller company with fewer factories and significantly less capacity. But even at its peak in 2000, the company's total worth was $56 billion, The Washington Post reported Tuesday.

Industry analyst Maryann Keller, author of Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, said she did not see GM hitting those benchmarks in a very long time."

Ron Bloom, a senior adviser to the Obama administration's automotive task force, said a number of scenarios had been studied, but by no means would (I) say I am highly confident "¦ all of the taxpayer investment in GM will be returned.

GM first received $20 billion in loans in December. When the company asked the Obama administration for a second cash infusion, the government balked.

The bankruptcy plan, however, includes an additional $30 bill from the government. In exchange, taxpayers will own 60 percent of the restructured GM.

In addition, the new GM will owe about $8.8 billion in secured debt and preferred shares, the newspaper said.