General Motors Corporation (MTLQQ">MTLQQ), in an attempt to further strengthen its financial position, has announced that its South Korean subsidiary, GM Daewoo Auto & Technology Inc., will fully repay its revolving credit facility this month. As of September 30, 2010, the facility had a balance of $1 billion.
GM Daewoo is the third largest automobile manufacturer in South Korea. The company has five manufacturing facilities in Korea and an assembly facility in Vietnam. GM owns 70.1% of the company while other stakeholders including Korean Development Bank, Suzuki Motor and Shanghai Automotive Industry Corporation own 17%, 6.8% and 6%, respectively.
Recently, GM completed its initial public offering (IPO) and has managed to sell 478 million shares at the targeted price of $33, raising $15.8 billion. However, the offering size of the IPO rose to $23.1 billion after the bankers, handling the IPO, exercise in full their over-allotment options to purchase an additional 71.7 million shares for $2.37 billion
The IPO will help the U.S. government recover about half of its unpaid loans to GM. Of the $52 billion in loans extended by the government in exchange of a 61% ownership in the company, $6.7 billion has been repaid in April this year, leaving $45.3 billion due for repayment.
In the third quarter of the year, GM has topped both its hometown rivals, Ford Motor Co. (F) and Chrysler LLC, by showing a profit of $2.16 billion or $1.20 per share in sharp contrast to a loss of $858 million or 73 cents per share in the year-ago quarter. Operating income was $1.85 billion versus a loss of $1 billion a year ago.
The automaker's profit was fueled by the company's turnaround performance in North America, which had been witnessing substantial losses earlier, and impressive growth in sales volume in GM International Operations segment.
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