Treasury To Unload Remaining GM Stake
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.
So, which Chinese government-owned company will buy this stake?
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.
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".
Better get out before GM declares bankruptcy again! Yeah, it will probably be several years, but still...