Treasury Dept. sells $621M stake in GM

Treasury Dept. sells $621M stake in GM
Wed, Apr 10 detroitnews.com

Washington — The U.S. Treasury stepped up its pace of selling off its remaining shares in General Motors Co. in March, selling more than 21 million shares and recouping $620.9 million.

In February, Treasury sold at least 17.2 million shares of stock as it vows to exit its stake in the Detroit automaker by March 2014.

Treasury hasn’t disclosed the precise number of shares it sold, but based on stock prices in March, the government sold between 21 million and 23.6 million. That means since January, Treasury has sold at least 40 million shares — or at least 13 percent of its 300

million shares it is selling off. Treasury said last month it had net proceeds of $489 million in February and $156.4 million in January for the sale of GM stock.

The Treasury has recouped $30.4 billion of its $49.5 billion bailout. It swapped most of its bailout to GM awarded in 2008 and 2009 for a 61 percent majority stake in 2009. The government shed about half its stake in GM’s November 2010 initial public offering and after December’s sale, shrunk its stake to 19 percent.

The Treasury plans to disclose on a quarterly basis how many shares of GM stock it has sold; it reports monthly its proceeds from the ongoing sales.

In January, the Treasury named Citigroup Inc. and JPMorgan Chase & Co. to manage the sale. The banks will get a 1 cent per share commission — or $3 million — for the sale of the entire stake.

In December, the Treasury sold 200

million shares of its GM stock to the Detroit automaker for $5.5 billion, or $27.50 a share.

To prevent hedge funds and other investors from taking advantage, the Treasury doesn’t make the trading plan public. The plan puts limits on how much stock can be sold at any given time and at what prices. Government officials also can direct the banks on when they should sell more shares.

The Treasury said it “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.”

The government needs to get $75 per share for its remaining shares to break even on its $49.5 billion bailout. It initially held a 61 percent stake before selling about half of its shares in GM’s November 2010 IPO at $33 a share.

At current prices, the Treasury would lose more than $12 billion on its GM bailout.

In February, the Treasury Department said its estimate of losses on the $85 billion auto

bailout fell 16 percent, or $4 billion, in large part because of a rebound in GM’s stock price. The Obama administration said in a report to Congress that its projected auto losses fell to $20.3 billion, from its prior quarterly estimate of $24.3 billion. The White House 2014 budget proposal released Wednesday reduced its estimate of auto bailout losses to $23 billion, down from $25.4 billion.

The Treasury still holds a 74 percent stake in Ally Financial, the Detroit-based auto finance firm, as part of a $17.2 billion bailout, but hopes to eventually break even. Ally is shedding its foreign operations as part of its efforts to repay taxpayers.

dshepardson@detroitnews.com

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