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Congratulations!
Correct Answer!
Escrow
A. The general arrangement under which a legal
document or property is delivered to a third party until the occurence of a
condition.
 Listen to
pronunciation
Legal Definition -
1.
A legal document or property delivered to a third
party to be held by the third party for a given amount of time or until the
occurrence of a condition, at which time the third party is to hand over the
document or property to the promisee. 2. An account held
in trust or as security. 3. The holder of such a
document, property or deposit. 4. The general arrangement
under which a legal document or property is delivered to a third party until
the occurence of a condition.
Black's Law Dictionary Eight Edition 2004
Current
Usage -
GM says could use IPO to pay back U.S. gov't debt
Fri Jul 10, 2009 8:00pm EDT
By Kevin Krolicki
DETROIT (Reuters) - General Motors Corp GMGMQ.PK could use the proceeds of
an initial public offering of stock as soon as 2010 to begin paying down
some of the debt it owes to the governments of the United States and Canada,
a senior executive said on Friday.
GM Chief Financial Officer Ray Young also said the automaker could move
faster toward generating positive cash flow and achieving profitability than
planned if U.S. auto sales recover in 2010.
"Naturally we would love to go faster and I'm sure the new GM board will
push us to see whether we can accelerate these plans and actions," Young
told Reuters Television in an interview.
"We're forecasting some modest recovery in 2010 in the United States but at
this juncture it's hard to predict what will happen in 2010," he said.
GM, which emerged from bankruptcy on Friday, is now more than 60 percent
owned by the U.S. Treasury. The governments of Canada and Ontario hold 11.7
percent. In addition, the new GM owes $8 billion to the U.S. and Canadian
governments under loans that mature in 2015.
Young said GM could use an initial public offering of its shares, which
could happen as early as 2010, to pay back debt.
"To the extent that we do an IPO, whereby, let's say the government sells
some of their shares but we also issue some new shares, those proceeds could
be used to repay part of the US Treasury and Canadian government loans,"
Young said.
As part of the deal to create the new GM by selling its best assets out of
bankruptcy, the U.S. Treasury transferred the remaining $20 billion in
government emergency financing to an
escrow account for GM.
Those funds will be available to cover GM's operational needs as it
continues to burn cash this year. The automaker, which filed for bankruptcy
on June 1, has lost over $80 billion and burned through over $40 billion in
the past four years.
Young said it would be "premature" to say whether GM could decide to return
some of the funds now in escrow
to the U.S. Treasury.
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