GM & Feds Announce They’re Breaking Up, Automaker to Buy Back 200M Shares
General Motors announced on Wednesday that it will buy back approximately 200 million shares of its common stock from the U.S. Treasury Department, leaving the feds with about a 19 percent stake in the company.
“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” Dan Akerson, chairman and CEO of GM, said in a statement.
Dan Ammann, senior vice president and CFO added, “A fortress balance sheet has been a pillar of GM’s financial strategy and has enabled us to undertake today’s actions. GM’s balance sheet will remain very strong, with estimated liquidity of approximately $38 billion at the end of 2012, following the closing of the share buyback.”
GM and the Treasury Department agreed to a $27.50 per-share buyback, a total of about $5.5 billion.
The Treasury Department also announced on Wednesday that it plans to divest itself entirely of the automaker in the next 12 to 15 months.
“Today, as part of its continuing efforts to wind down its investments in the Troubled Asset Relief Program (TARP), the U.S. Department of the Treasury announced its intent to fully exit its investment in General Motors (GM) within the next 12-15 months, subject to market conditions,” the agency said in a statement.
Treasury will sell the 200 million shares of stock back to GM by the end of the year and plans to get rid of the remaining 300.1 million through “various means in an orderly fashion.”
“The auto industry rescue helped save more than a million jobs during a severe economic crisis, but TARP 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 adds.
Treasury invested approximately $49.5 billion in bailing out GM. To date, the federal agency has recovered about $28.7 billion of that cash via repayments, sales of stock, dividends, interest, and other income.
At $27.50 a share, GM is buying back its stock at about an eight percent premium over the going price. However, most reports put the “break even” point for Treasury at about $50 a share. Selling 200 million shares at nearly half that price means Treasury will have to figure out a way to offload the other 300.1 million at well above market value — or post a multibillion dollar loss on the GM bailout.
Follow Becket Adams (@BecketAdams) on Twitter
Featured image courtesy Getty Images.
Benghazi, IRS, AP...What's next? Only TheBlaze TV offers the truth from Glenn Beck, Andrew Wilkow, and Real News from TheBlaze. Get instant access and a free trial here.
- ‘Bigoted, Religious [Zealots]‘: High School Senior Allegedly Expelled, Charged With Felonies Over Gay Relationship With ‘Consenting’ Fellow Student 1,030 Comments
- ‘The Daily Show’ Creator Makes Outrageously Offensive Anti-Conservative Joke About Okla. Tornado 462 Comments
- Washington Times Writer: Fox News Scandal Goes ‘Much Deeper,’ W.H. Sitting on Something Top Obama Aides ‘Terrified’ About 434 Comments
- University Will Investigate Christian Professor’s Intelligent Design Class Following Atheist Furor 309 Comments
- See the First Behind-the-Scenes Photos as Beck and Mercury One Survey the Damage in Okla. 248 Comments
- ‘Death! You F**k!’: Bat Mitzvah Chaperone Unleashes Explosive, Profanity-Laced Tirade Against Kids Over Candy-Throwing Incident Read More
- How Can God Let Tragedies Like the Okla. Tornado Exist? Pastors Weigh In 130 Comments
- Is This Video of Pope Francis Performing an Exorcism? Read More
- Boston Cardinal Snubs Irish PM Over Abortion Support Read More
- Incredible: The Moment a Woman’s Dog Emerges from Rubble During TV Interview Right After She Describes Losing Him 223 Comments
- China Sets off What Could Be the World’s Longest Demolition Read More
- Here are the 5 Most Interesting Moments from Tuesday’s Hearing on the IRS Scandal Read More
- Jay Carney Shifts IRS Timeline (Again!) Read More
- Top IRS Official at Center of Political Targeting Scandal Will Plead the Fifth 132 Comments
- Disgraced IRS Interim Chief Now Fully Admits Knowledge of Planted Question (but Did It Reveal a Past Half-Truth?) Read More
- The Incredible Role Facebook Played in the Aftermath of Devastating Okla. Tornado Read More
- Tech Company Demonstrates Remote Disabling of a ‘Smart Gun’ Read More
- Meet the Blind Man Nicknamed ‘Midnight Gunslinger’ Who Has 80% Shot Accuracy Read More
- How a $4.5 Million Network of 181 Sirens Helped Save Lives in Oklahoma Twister Read More
- See the Record-Setting Python a Man Caught With His Bare Hands (and Guess How Much It Weighed) Read More
- North Korea sends leader's special envoy to China
- Early vote points to close race as LA picks mayor
- Straily, Cespedes push A's past Rangers 1-0
- Spurs blow late lead, beat Grizzlies 93-89 in OT
- Apple case seen as possible spur to tax action
- Bernanke testimony to be studied for policy clues
- North Korean leader sends 'special envoy' to China
- State media shows NKorea has new military chief