Former GM CEO Ed Whitacre has urged the Obama administration to offload its remaining shares in the company in a new opinion piece published in The Wall Street Journal. At the moment, the U.S. government holds 26.5 percent of GM, and stands to lose around $14 billion if the shares were sold at today’s prices.
“The Treasury Department should sell every last share that it owns of General Motors – as quickly as possible,” Whitacre wrote in an opinion piece for The Wall Street Journal. “It’s time for Treasury to step out of the way so that GM can fully focus on what it does best.”
In the piece, Whitacre revealed he had proposed a plan in 2010 that would allow the government to completely wash its hands of GM. That plan, hatched while Whitacre was still GM’s auto task force-appointed chairman, called for an initial public offering for the government’s entire 61-percent majority stake, with GM writing a check to Uncle Sam to make up for any losses from the $49.5 billion bailout.
Whitacre says in the essay that he pushed for the government to sell its entire stake in order to send a message to Wall Street that GM was back. If the stock sale didn’t earn enough to cover the bailout cost, GM could then use its own cash to ensure taxpayers were fully repaid. This plan, however, was rejected.
The Treasury Department instead decided to sell 412 million of its 912 million shares in the IPO of November 2010, which generated $23.1 billion to become the largest IPO in history. Whitacre’s plan would have required an even larger sale, which he believes is the reason it was rejected.
But Whitacre says GM can’t shake its “Government Motors” nickname as long as the company is still supported by bailout funds. Last October, the Obama administration dropped its plans to sell its remaining GM stock because prices remained low. The government has postponed the sale until at least November, as the losses incurred could become a political issue affecting the presidential election.
Source: The Wall Street Journal