Treasury to sell remaining GM stake, marketwatch.com reports

YEREVAN, December 20. /ARKA/. GM will purchase 200 million shares at $27.50 in a deal that should close by the end of the year, while the Treasury will sell the other 300 million shares as soon as January, depending on market conditions, Marketwatch.com reported. 

GM shares closed Tuesday at $25.49. 

The Treasury has already recouped more than $28.7 billion of the $49.5 billion it invested in the automaker. Assuming the government sells the remaining 300 million at the same $27.50 price GM is paying, taxpayers will lose about $12.6 billion all told. 

The Treasury, while not confirming the likely loss, talked up the benefits of rescuing the automaker, as well as Chrysler, via a prepackaged bankruptcy plan.

“The auto industry rescue helped save more than a million jobs during a severe economic crisis, but [the Troubled Asset Relief Program] was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time,” said Assistant Secretary for Financial Stability Timothy G. Massad. 

“Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests,” he said. 

Getting out of TARP will get GM out of government rules that, for example, limit executive pay. 

GM shares rallied on the news, rising 7% to $27.27. 

“A U.S. Treasury selldown was increasingly anticipated, although the actions were earlier than we expected and at a lower price,” said Peter Nesvold, an analyst at Jefferies, in a note to clients. He said he expected GM to pay at least $30 a share to buy back its own stock. –0--