DETROIT (AP) -- General Motors Co. has pumped another $2 billion into its underfunded U.S. pension plans by giving them 60.6 million shares of common stock.
The contribution comes on top of $4 billion in cash that the Detroit company paid into the plans in December.
The moves cut $6 billion off a $27.4 billion pension liability that was on the company's books. As of Dec. 31, 2009, the U.S. salaried and hourly plans were $17.1 billion short of their obligations, while GM's non-U.S. pension plans were $10.3 billion short. The plans will be revalued as of the end of 2010, and the shortfalls should be far lower due to the contributions and investment growth in the past year.
GM said the earlier $4 billion contribution came from its cash reserves. The company announced plans to make the cash and stock contributions in October. Its executives have said their goal is to become debt free so they can better weather future economic downturns.
GM has made an impressive turnaround since its 2009 trip through bankruptcy protection. The company made $4.2 billion in the first three quarters of last year and is expected to post a fourth-quarter profit in the coming weeks.
In the four years before the 2009 bankruptcy, GM lost more than $80 billion because it was saddled by enormous debt and costly labor contracts, many of which were eliminated during the bankruptcy. But its common stockholders lost their investment and bondholders got only a fraction of their initial investment.
GM returned to the New York Stock Exchange in November with an initial public offering. Its shares started at $33 but closed last Thursday at $38.27. They fell two cents to $38.25 in pre-market trading last Friday.
Published: Mon, Jan 17, 2011
