As it moves to fully divest itself of General Motors, the U.S. Department of the Treasury sold $490 million of GM stock last month. According to The Detroit News, that represents approximately 17.2 to 18.1 million shares.
The U.S. Treasury previously held 500 million shares in GM after the 2008-2009 bailout that helped keep the automaker from going bankrupt. The government and GM would like to end that, in part because of the stigma around the bailout and the unfortunate nickname “Government Motors” that is used to criticize both groups. However, fluctuating stock prices mean the Treasury must sell its remaining shares carefully or risk losing billions of dollars on the bailout.
Last month, the Treasury reportedly sold 3.5 percent of the 300 million shares it currently holds in General Motors, earning between $24.50 and $27.00 per share. Coupled with shares sold in January, the Treasury has sold about seven percent of its remaining stake in GM.
A GM representative told us the company is unaware of the Treasury’s plans to sell stock and is not informed when or to whom the government divests its stock. The Treasury publicly announced in December 2012 that it would shed all its holdings in GM within 12 to 15 months, by March 2014 at the latest. The sell-down was planned to happen “in an orderly fashion… pursuant to a pre-arranged written trading plan.”
In December, GM agreed to buy back 200 million of the government’s 500 million shares for $5.5 billion, or about $27.50 per share. That helped shed much of the government’s bailout stock, although The Detroit News notes that the Treasury would need to sell its remaining 300 million shares for $72 apiece in order to break even. Otherwise, the bailout will lose money for the government.
The Treasury said in December 2012 it had recovered $28.7 billion of the $49.5 billion it spent to bail out GM in 2008 and 2009.
Source: The Detroit News