By on February 26, 2013

The U.S. Treasury has begun a sale of its remaining stake in General Motors, with a goal of selling its remaining shares by March 2014. Currently, the government owns more than 300 million shares in the auto maker, equivalent to a 19 percent stake.

A statement released by the Treasury says that the U.S. government

“intends to sell its shares into the market in an orderly fashion and fully exit its remaining GM investment within the next 12-15 months, subject to market conditions.”

According to the Detroit News, the government has managed to recoup $29 billion from its $49.5 billion bailout. To break even, GM would have to get $72 per share, an unlikely scenario. Currently, GM is trading at $26.35 a share, which would result in a $12 billion dollar loss for the government. GM’s last stock sale occurred when prices were around $33 per share. J.P. Morgan and Citigroup will be  handling the sale for the Treasury and are expected to make about $3 million in commissions. And of course, once the government is out of GM’s hair, matters relating to executive compensation will be a matter for the company, rather than legislators.

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21 Comments on “Treasury To Unload Remaining GM Stake...”

  • avatar
    Felix Hoenikker

    I thought that the Feds would wait to sell their shares afer GM ditches or downsizes Opel. Any idea of how much the share price is depressed by the European losses?

    • 0 avatar

      I share Bertel’s idea that Opel’s future is bankruptcy. That might happen WHILE the government shares are being divested, not necessarily after. I would have thought the Treasury’s timetable might be useful for estimating when the Opel bankruptcy occurs, but then they added that “subject to market conditions” qualifier. Anyway, the time period is probably short enough that an “Opel Death Watch” should start soon.

      • 0 avatar

        That helps explain the sudden push of Chevrolet and Cadillac in Europe by Docherty. If GM is really losing ground in every market it will soon be reflected in the share price. Its a good leading indicator.

  • avatar

    Who knows how much money is printed per day?

  • avatar

    “…which would result in a $12 billion dollar loss for the government”

    No, the government doesn’t have any money. All they have is access to the taxpayer’s money. This loss, if equally allocated, would be about fifty bucks per taxpayer or about forty dollars per person.

  • avatar

    Treasury has unloaded $156.4 million worth of shares in January or 5.4 million shares. That leaves 295 million shares to be dumped by early 2014 or 27 million shares a month from now on. Expect big drops in share price in the coming quarters. This would mean treasury will lock in the losses and GM would remain Govt motors for ever. The 200 million shares GM bought from the treasury in November for $5.5 billion will be worth $7 billion if the stock price hits $35.

    I doubt Opel is going away. They may declare bankruptcy to get rid of contracts similar to GM’s North American bankruptcy in 2009. Opel is getting 23 new or redesigned models by 2016. The new Mokka and Adam are huge hits. Opel will take all year before they can fill 80,000 orders for the Mokka. Opel/vauxhall were the only mainstream brands to see increased January sales.

    I finished reading Steve Rattner’s “Overhaul” a few days ago. It is a fascinating read, a book i recommend to anyone following the industry. It is amazing to know how lucky GM is to be alive now. A combination of events converged at the right time to enable restructuring. The stars perfectly aligned for GM in 2009. Also, a little known 37 year old republican, Harry Wilson was instrumental in restructuring GM into a viable corporation. Harry successfully fought GM’s insular culture and denial.

  • avatar

    So, which Chinese government-owned company will buy this stake?

    • 0 avatar

      Treasury isn’t going to auction the stake in one or more large blocks, but sell in drips and drabs over time. There are lots of transient downward pressures on GM’s stock price, the biggest being Treasury’s sales. Once that sale is completed and other pressures dissipate, the stock price will go up. There are so many short positions on the stock that at some point the short sellers will have to buy the stock to complete the transactions and create their own stock price bounce. There are others probably waiting to buy the stock once it bottoms out who will help amplify the bounce. Then the stock price will do what the overall market has always done: fluctuate.

  • avatar

    Just get it over with.

    I remain no fan of the bailout, but it happened. If the loss is ‘only’ $12 billion vs $50 billion, I suppose that’s better. It might amount to a year’s salary for all the jobs saved.

    Bailout haters won’t want this deal to break even (don’t worry, it can’t).
    Bailout lovers will say it was worth doing.

    But for perspective, we provide farm subsidies EVERY YEAR to the tune of $20 billion. Do any blogs whine about that? They should.

    • 0 avatar

      Yeah, I agree, it did happen. I was no fan either but the core problem still remains. The problem that GM is ‘too big to fail.’

      I believe that the loss to the taxpayers on GM will be closer to $20B, that’s Twenty Billion bucks. And I don’t think that GM as a whole or in parts is worth $20B bucks.

      When the taxpayers bailed out the banks, financial institutions, investment houses and mortgage firms, overtly and covertly, there was a better than even chance that the Treasury would see all of its money back, with interest. That’s already happened in most cases.

      But GM, heavily dependent on SELLING cars and trucks to make a profit, is just not a candidate for repaying anything. If Americans believed in GM they would flock out and buy GM vehicles to support GM. But not enough believe in GM to put real money on a GM product.

      OTOH, there’s the US automaker formerly known as Chrysler, now foreign-owned. I never was a Chrysler fan, but I love what Sergio and Italians have done with it. Ironically, Chrysler is now keeping its parent company afloat. How strange is that?

      For $20B bucks that it cost the taxpayers to keep GM going, each taxpayer should receive a brand new GM vehicle, if they want one. I’m not so sure that there are many who would want one, even if given to them for free.

      Just remember Oprah’s give-away of free Pontiacs and how much those free cars cost the recipients when the IRS got through with them.

      • 0 avatar

        For the $20 billion, how do you work out each person gets a car? It comes to $100 each if you base it on 200,000,000 drivers. Hardly a car.

        You keep saying people are not rushing out to buy a GM car. I agree the majority are not, but more people are buying a GM car than any other companies car in the US.

        Chrysler is doing well, Sergio has not had much to do with it yet since as you know it takes a while for the pipeline to deliver. I am not a fan, like most people, of the new Jeep front end. Lets see if that works out. Also how do you explain Dodge, Chrysler etc being ranked consistently lower than GM brands (or most other brands, LR being the main exception) in quality/reliability ranking?

        • 0 avatar

          Mike978, please re-read….

          “if they want one. I’m not so sure that there are many who would want one, even if given to them for free.

          Just remember Oprah’s give-away of free Pontiacs and how much those free cars cost the recipients when the IRS got through with them.”

          There aren’t $20B worth of people who will want a GM car. If there were, GM would be selling a lot more cars than they do now.

          And CRs recent publishing of the best cars did not include one single Ford, GM or Chrysler vehicle. They still don’t measure up to the foreigners, it would appear.

          I’ll admit to trepidation when my wife wanted a 2012 Grand Cherokee to replace her well-worn 2008 Highlander. But so far, in over 30K miles since I bought it in Nov 2011, we have had no problems.

          We should not shortchange Sergio and the Italians. They did a marvelous job of turning Chrysler around in the market place, considering what they got was a carcass.

          Granted, Daimler gets all the credit for the R&D and designing the 300, the Grand Cherokee and the RAM, but Fiat gets the benefit of all that effort.

          Sorry about the delayed reply. I was in El Paso, TX, all day today, on business.

    • 0 avatar

      Excellent point about the farm subsidies.

  • avatar

    I’m sure we’ll all be hearing soon about how the takeover was a success. Only in the demented view of the Federal government is losing over $12 billion in taxpayer money a “success”.

  • avatar

    Better get out before GM declares bankruptcy again! Yeah, it will probably be several years, but still…

    • 0 avatar

      But when GM goes bust again, the government will bail GM out again.

      Here’s another prime example of what happens when the national policy is to “invest and raise revenue”, formerly known as spend and tax.

      With Solyndra, A123 et al still fresh in our minds, the national policy now is to divest itself of worthless stock and incur a $20B loss.

      Hey, don’t worry, be happy! The taxpayers just have to suck it up.

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