U.S., Canada closer to selling off GM
U.S., Canada closer to selling off GM stockWed, Sep 11 detroitnews.com
General Motors Expected To File Paperwork For IPOThe U.S. and Canadian governments are getting closer to selling off their General Motors Co. stock.
The U.S. Treasury Department sold $811 million worth of GM common stock last month — an estimated 23 million shares — leaving it with somewhere around 113 million shares. Meanwhile, the Canadian federal government and Ontario provincial government intend to sell 30 million shares worth about $1.1 billion, leaving them with 110 million shares.
The sales will leave the U.S. government holding about 8.7 percent of the automaker and the Canadian governments holding about 8 percent.
GM stock sold in a range of $33.50 to $37.18 in August. At the midpoint of $35.34, the U.S. government would have sold roughly 23 million shares. In July, the government sold $877 million worth of stock. At the midpoint of $35.56, it would have sold roughly 25 million shares. The Treasury says the price per share of stock sold in July and August will be revealed at a later date.
At the current rate, it should take about five months for the U.S. government to exit. In total, the Treasury has recovered $35.4 billion of its $49.5 billion bailout of the automaker. That means taxpayers are still $14.1 billion in the hole.
With the estimated 113 million shares remaining, they would have to sell for around $125 each for the U.S. government to break even, more than triple the current trading price. GM stock closed at $36.35 per share Wednesday.
The U.S. Treasury Department, which initially held a 61 percent stake in GM as part of its $49.5 billion bailout, owned 500.1 million GM shares in December.
The Canadian and Ontario governments agreed to sell 30 million General Motors Co. shares worth about $1.1 billion to Bank of America Corp. and Royal Bank of Canada in a block trade.
That sale will be completed Sept. 16, the Canadian department of finance
said in the statement. The shares were sold to the banks at Tuesday’s closing price of $37 minus a discount, the government said.
Before Tuesday’s sale, the federal and Ontario governments together held 140 million common shares in GM, or a 10 percent stake, valued at $5.1 billion at the current stock price, according to data compiled by Bloomberg.
When the U.S. and Canadian governments sell all their shares, it will end a sad chapter in GM’s history. The company nearly ran out of cash in 2008 and needed government money to survive a trip through bankruptcy reorganization. Since then GM has posted 14 straight profitable quarters.