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U.S. sells GM shares, plans to exit ownership within 15 months

Now down to a 19 percent stake, the government says it will sell the remaining shares by 2014.

By Clifford Atiyeh Dec 19, 2012 7:03AM
The U.S. government is selling 200 million shares of General Motors stock today, the first step of a final series of buybacks that will see the Treasury divest its remaining stake in the country's largest automaker.

The Treasury, which pumped $49.5 billion into GM during the automaker's bankruptcy proceedings in 2009, once owned 61 percent of the company.

Its current 26.5 percent stake has been cut to 19 percent as of today, and the remaining 300 million shares will be sold back to GM within 12 to 15 months, the Treasury said.

GM had wanted to buy back the 200 million shares in September, but the Treasury balked, citing a lower $24.14 share price. Many industry watchers saw the move as an attempt to protect President Barack Obama's re-election campaign, which would have had to explain billions in bailout losses just weeks before the Nov. 4 election. The share price in today's transaction was $27.50, below the $33 initial public offering price in November 2010 and about half the estimated $53 price the Treasury needed to break even on its purchase.

The government has conceded that it will never recover the full $49.5 billion from GM. With the sale of remaining shares at current prices, the government could stand to lose more than $12 billion. It has already lost $1.3 billion from the Chrysler bailout, despite the automaker's early full loan repayments.

With today's sale, the Treasury agreed to waive certain restrictions on GM, such as the purchase of private jets and specific levels of U.S.-based manufacturing. The caps on executive pay remain.

The government still owns 74 percent of Ally, GM's consumer lending arm -- formerly known as GMAC -- but has recovered about $5.9 billion.

[Source: GM, Treasury]
23Comments
Dec 19, 2012 9:08AM
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Do I get reimbursed my share of the bail out cost?

(Seriously doubt it... jacka** politicians)

Dec 19, 2012 11:58AM
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So if we had let GM go under we would have lost a couple of hundred thousand jobs, that's nothing compared to the millions of jobs lost under our current administration.
  Fact is, if GM had gone under, Ford, Chrysler, Toyota, Nissan, Honda and Subaru would have had to pick up production to meet demand. To do that they would have to hire a few hundred thousand people thus...GM going under would have meant nothing to our economy.
  Our government bought high, sold low, didn't get paid back fully. Their stupid decision making is the reason that we are in this mess to begin with.
  If Obama had half a brain he would have loaned the money to GM with stipulations that they stop outsourcing jobs to foreign countries and bring back the tens of thousand of jobs that they put in place in Mexico. He could have ordered them to restructure their management and adjust the salaries of the grossly overpaid union workers which would allow the company to right their ship.
  Instead he loaned blindly and what did GM do with the money? They ran to China with it to hire their people to build GM's.
  If GM was on fire, I wouldn't piss on them.
Dec 19, 2012 7:16PM
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At this point I don't even care if we the US taxpayers should have bailed out GM.  It was done, right or wrong.  What's important now is how healthy is GM.  It obviously is not.  GM products are still inferior relative to its competitors.  GM family sedans like the Impala and Malibu continue to suffer poor esthetics and ergonomics, a tough sell to consumers with ever increasingly refined tastes and standards.  GM lost the small pickup truck market to its competitors.  The big trucks are suffering under its own weight and fuel consumption.  The heavy full size trucks are selling better but Ford edge GM and Dodge is right behind.  Worse GM uses foreign manufacturer for its diesel while Dodge and Ford are domestic.  The light duty half-ton pickups face stiff competition from Ford, Dodge, and Toyota.  The inflexible UAW contracts can make quality implementation of quality improvement measures slow and costly. 

Worse, there is nothing in the pipeline that would excite me to buy a GM product.  They may be there but until the cars and trucks are in showroom floor, consumer perception will not change.  With this news that GM is costing American taxpayers bail-out moneys, many consumers will still negative attitude toward the brands.

Worst of all, management at GM want to get rid of the US taxpayer holdings so it is free of the compensation restrictions.  Once the corporate management get rid of those, their compensation packages will go up.  Bonuses will be padded.  Resentment in the rank and file will rise.  Eventually, product quality will suffer.  Sales will sag.  More money is needed.  GM will want to sell bonds, but investors will have remember the days they were fleeced.  Ultimately, GM will be back in the same hole and may need another bail out.

Will we the taxpayers be there in 2020?

Dec 19, 2012 7:56PM
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There are a couple of key facts missing from this blog post. First off, the amount of money America lost during the bankruptcy period is staggering yes but what's also staggering is the amount of money GM and Chrysler were allowed to "write off" when the companies filed bankruptcy shortly after being "bailed out". 

 

Secondly, the majority of Americans were against the bailout to begin with. 

 

Thirdly,

 

If the companies would have made competitive products to begin with, we wouldn't have had to bail them out or lose the additional assets from the bankruptcies.

 

What we're left with is taxpayer debt, hit/miss vehicles and a stock price that's half of its current worth.

 

In any business model, that's considered a failure and the CEO/Management team would have been fired....without pensions.

 

 

Dec 19, 2012 1:49PM
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Could someone please explain to me why the US government has stock in GM in the first place. Although.. that would explain why they continually get away with producing such crappy products. Hey...do they own stock in China too???
Dec 19, 2012 11:14AM
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I never ceases to amaze me how really ignorant some are.  The bail out of GM/Chrysler  was needed.  The ripple affect would have cause this country to go into a far deeper and longer recession/depression.  Some say "I am not in the car industry, it doesn't affect me".  Think broader people.  All those out of work means no spending, no health insurance, no taxes ect.. YOU ARE AFFECTED. 
And another point some don't think about is.  Other countries give their auto industries favored tax breaks/loop holes, laws ect.  This is an unfair advantage when talking about "FAIR" trade. 

Dec 19, 2012 9:59AM
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Thank you to the US treasury for starting to do what you should have been doing the last 10 months and getting out of GMs business.
Dec 19, 2012 2:37PM
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These journalist are idiots too.....Correction....the largest automaker in the US is now TOYOTA....will finish with 1/2 a  millionor so over Government Motors that is lsoing market share again.....should have let it restructure through bankruptsy and make it a better company.....it will never regain it's glory
Dec 19, 2012 8:32AM
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Nicely done President, a 50% loss on the investment!    After seeing the new Silverado and Sierra which is (or was) their cash cows, it's clear to me the government should have just let them go under.
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