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GM & Feds Announce They’re Breaking Up, Automaker to Buy Back 200M Shares

Dec. 19, 2012 10:29am Becket Adams

General Motors Set to Buy Back 200 Million Shares of Common Stock, Leaving Feds With 19 Percent Stake in Company

(Photo by Bill Pugliano/Getty Images)

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.

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Featured image courtesy Getty Images.

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Comments (70)

Shasta
Posted on December 19, 2012 at 11:56am
I wonder if OBlamo is out of the picture, if gm will restart the hydrogen fuel cell project, that O killed on day one.

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- Detroit paperboy
  Posted on December 19, 2012 at 1:28pm
  It wasn’t an auto industry bailout….”…..”..it was a union thug, BAILOUT……
  
  Report this comment
- JRook
  Posted on December 19, 2012 at 1:53pm
  “The Bush administration spent more than $500 million on research into producing and distributing hydrogen so it could be used in cars powered by fuel cells.” Thought the folks here didn’t like the government assisting start up alternative energy companies. Obama removed another $100+ billion from his budget in order to offset the lagging effects of Bush’s economic disaster, tax cuts and over spending. Bush left the PRESIDENT a $1.2 trillion deficit run rate when he left office. As the 2009 budget was Bush’s last fiscal year and that was the deficit.
  
  Report this comment
- jorge_washington
  Posted on December 19, 2012 at 2:07pm
  “I wonder if OBlamo is out of the picture, if gm will restart the hydrogen fuel cell project, that O killed on day one.”
  
  GM killed it’s own electric car, the EV1. This car car ran for about 6 years in testing getting well over 100 miles on a charge but never mass produced. GM killed it in the late 1990′s for reason only they know but they may have been in bed with big oil. Now big oil is dying the Japanese are running away with electric cars. That’s capitalism for you at work.
  
  Report this comment
- Al J Zira
  Posted on December 19, 2012 at 2:23pm
  JROOK: You’re still blaming Bush 4 years later. So Bush left us 1.2 trillion in the hole and Obama has us at $16,000,000,000,000! And the run rate is not even calculated because there’s no budget. Obama invested taxpayer money in private companies on speculation, something that a president is never supposed to do, and lost. Obama hasn’t proposed a budget since taking office, something he’s bound to constitutionally, but he continues to usurp the constitution for his own gain. Should I go on?
  
  Report this comment
- G-WHIZ
  Posted on December 20, 2012 at 11:01am
  The [hydrogen]-drivven auto was test-drivven by many news-reporters. it was extreemely efficient compaired to the 700pounds of batteries-if -added-weight to power the roller-blade-sized car[the Volt] that was PUSHED BY THE FEDS!! Ya wanna recharge your 100%-electric every 40miles ina 1000mile-trip?? Let’s see…2-3hrs per charge X [1000mi-div-by-40]…..compaired to Hy-fuelcell car at a few minutes to refill and hundreds-between refills………HMMMMMmmmmmmm…. . Oh–yea…several times more internal-leg and luggage room… .
  
  Report this comment
tothepoint
Posted on December 19, 2012 at 11:55am
The government paid in stockholders pennies on the dollar when they confiscated the GM stock. Therefore, they should pay back the stockholder what they stole from them.

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- JRook
  Posted on December 19, 2012 at 1:49pm
  You do understand that if the government had not assisted GM it would have gone bankrupt and the stock holders would have received less, if not zero.
  
  Report this comment
- johnnydangerously
  Posted on December 19, 2012 at 3:24pm
  Rook
  You do realize that GM would have went thru a normal bankruptcy, Bond holders and stock would not have been kicked to the curb, the ones responsible would have been kicked to the curb instead of being rewarded as they were under the Gov’t bailout. GM would still bee around only leaner and with better people running the company.
  
  Report this comment
outwest
Posted on December 19, 2012 at 11:52am
‘Assistant Secretary for Financial Stability’ ….Is that a real job title??? Is that a government job or a GM job? Oh, never mind, You’re paying his salary either way.

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diskinetic
Posted on December 19, 2012 at 11:44am
Imagine if all the stimulus money had been sent at Christmas as equal checks to everyone who pays taxes. Roughly $3500 per person dropped into America’s lap at the Most Spendiful Time of the Year. Instead, it went to people like the fine folks who made the Malibu Maxx and the Aztek.

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- decendentof56
  Posted on December 19, 2012 at 11:57am
  How can the bail-out be called successful if the taxpayers still own 19%.
  I have two older GM cars in my driveway. There will be no more.
  
  Report this comment
- jorge_washington
  Posted on December 19, 2012 at 2:15pm
  “How can the bail-out be called successful if the taxpayers still own 19%.
  I have two older GM cars in my driveway. There will be no more.”
  
  The same reason a bank checks your credit, makes you give a deposit, holds the deed to your property or title to your car until the loan is paid off.
  
  Report this comment
- jorge_washington
  Posted on December 19, 2012 at 2:33pm
  “Imagine if all the stimulus money had been sent at Christmas as equal checks to everyone who pays taxes. Roughly $3500 per person dropped into America’s lap at the Most Spendiful Time of the Year. Instead, it went to people like the fine folks who made the Malibu Maxx and the Aztek.”
  
  Imagine GM and Chrysler going into liquidation and 100’s of thousands of people with no job.
  Imagine Ford going into liquidation a short while later because the consumer fears Ford may be next and 100’s of thousands of people with no job.
  
  Imagine GM, Ford and Chrysler auto dealers all closing their doors and 100’ of thousands of people with no jobs.
  
  Imagine American parts manufactures that all three auto makers shared shutting their doors and 10’s of thousands of people with no job.
  
  Imagine the auto tire, battery, glass, steel to name a few industries would partially collapse because their biggest customers shut their doors and the 100’s of thousands of people with no job. They may have to be bailed out by foreign auto makers.
  
  Imagine the effects on local communities of all these job loses.
  
  Image the cost in re-training, welfare, education, unemployment benefits not only to the affected workers but also to their families that may extend into generations.
  
  Report this comment
@leftfighter
Posted on December 19, 2012 at 11:38am
Dan Akerson… his name sounds familiar. Where have I heard it before?

THAT’S RIGHT! He’s the guy that admitted that 70% of GM’s products are now built in China!

http://www.youtube.com/watch?v=Lvl5Gan69Wo

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- jorge_washington
  Posted on December 19, 2012 at 2:38pm
  ““Dan Akerson… his name sounds familiar. Where have I heard it before?
  THAT’S RIGHT! He’s the guy that admitted that 70% of GM’s products are now built in China!”
  
  That’s correct, GM has plants in China that make autos for that market and not for export just as BMW, Mercedes and Honda have auto plants in the US that only sell those cars in the US.
  
  Report this comment
- Fireking151
  Posted on December 19, 2012 at 3:25pm
  Wait a minute didn’t they also sell the Hummer division to China?
  
  Report this comment
CWPrequired
Posted on December 19, 2012 at 11:34am
Death to GM….at the hands of the union to boot.

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Heffe44
Posted on December 19, 2012 at 11:32am
If Obama is the true Marxist, Socialist, Revolutionary that you all paint him out to be, why is he selling the stock back at all? Don’t you think a true Socialist would want to hold onto a controling stake in one of the largest US companies. Maybe he’s not the Marxist your paint him to be… he is just another Moderate Republican.

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- tothepoint
  Posted on December 19, 2012 at 11:58am
  Obama took that stock from the stockholders, paying them pennies on the dollar!
  Obama stole it from them like a good Marxist.
  Further, there are plenty of other examples of why Obama is anti-American and a Marxist. Please do the research.
  
  Report this comment
- tothepoint
  Posted on December 19, 2012 at 12:06pm
  Your attempt to give Obama to the Republicans will not work.
  Republicans do not want a man of his ilk.
  Obama is the antithesis of a Republican of any stripe.
  Obama is pro-abortion, including supporting the killing of newborn babies who survive botched abortions. He even said he would kill off his own grandchild if one of his daughters got pregnant and didn’t want it. He said he would “Get rid of the mistake.” Disgusting and evil.
  
  There’s plenty more about this terrible President that you apparently are unaware of. I encourage you to do the research for yourself because it will be more meaningful to you than having someone spoon feed it. And, it is tiresome having to have to continually enlighten the lefty Obama supporters who refuse to learn the about their failed President Obama.
  
  Report this comment
- catty
  Posted on December 19, 2012 at 2:38pm
  don’t confuse them with facts!
  
  Report this comment
jackact
Posted on December 19, 2012 at 11:24am
Ok.
So when the UAW bankrupts them again we let them fail without a bailout and then the union workers have to look for work elsewhere?
I’ll agree to that.
Sincerely,
Federal Taxpayer

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- jackact
  Posted on December 19, 2012 at 11:30am
  Oh, and former stock holder.
  
  Report this comment
deltaecho
Posted on December 19, 2012 at 11:16am
The stench will never wash off, Barry.

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RodT82721
Posted on December 19, 2012 at 11:13am
Barry needs more spending money. He’s going on a $4 Million vacation in a week and wants to make sure the petty cash kitty is full.

What a deal for the tax payers! They were charged $50 Billion to pay back Barry’s campaign obligations to his union family, now they will get to pay off a large part of that with deflated money and stock. I wonder how much ot this sale will be made with borrowed tax money from Timmy?
The only losers are, once again, the tax payers.

It great how our most intelligent dear leader, that loves to pay investment banker with our borrowed money, will give another big gift to his favorite union.
Clearing not only their balance sheet from an onerous debit, with deflated dollars and stock, but hope to remove the Obama tarnish from their salesmen’s pitch.

Another big victory for Turbo Tax Timmy!

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Outlaw_Josey_Wales
Posted on December 19, 2012 at 11:11am
I would like to buy a $50,000 Chevy truck, pay for it with $27,500 worth of GM stock.

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- drattastic
  Posted on December 19, 2012 at 11:21am
  GM will never ever see another dime from me ( unless the gov. steals it from me and redistributes it to them) and neither will Chrysler. Sellouts.
  
  Report this comment
woodyee
Posted on December 19, 2012 at 11:08am
EF You, Gaybama Motors. You want to make up with the US? Pay back to the bondholders Gaybama stole the company from to give to you, with interest. Pay back the US dollars Gaybama used to rescue your union, with interest.

Then GTFO of our country and try your crap in Cuba.

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Dumb_White_Guy
Posted on December 19, 2012 at 11:03am
So does this mean the multi-million dollar fines the gubmint keeps assessing Toyota over and over again will stop??? No further need to kill off the competition???

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froggy19510
Posted on December 19, 2012 at 11:03am
There’s more of that “hope and change” you voted for.

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Stoic one
Posted on December 19, 2012 at 10:56am
Union bailout under the guise of business bailout….go fornicate yourself GM.

I pay interest on any loan I take out….so should you.

Bathhouse Barry told stock holders tough luck…greedy capitalist’s — thanks for the hit on my former 401k.

The bankruptcy laws should have ruled on GM, not barry.

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- RightUnite
  Posted on December 19, 2012 at 11:20am
  Amen Stoic. I will STILL never buy another GM vehicle…. EVER! They’re crap vehicles anyway.
  
  Report this comment
- Shasta
  Posted on December 19, 2012 at 11:53am
  Sure it was a union bailout. And the Chrysler secured bond holders got screwed (illegally) so the unions could get another gift. And every time you hear the words stimulus or infrastructure, that means paying of the unions as well. And guess what. Oblamo has made it clear he wants more infrastructure spending in whatever the outcome of the fiscal cliff negotiations are. I wish O loved the country like he loves the corrupt unions.
  
  Report this comment
DZ-015
Posted on December 19, 2012 at 10:54am
It will always be remembered as GUMMint Motors, just as the Soviet state-owned department store was known by it’s acronym, GUM (Gosudvarstveny Universalny Magazin).

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paulusmaximus
Posted on December 19, 2012 at 10:50am
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.
This show how successful it was for tax payers! If the White House want more revenue maybe they should collect the bad debts from their cronies

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- booger71
  Posted on December 19, 2012 at 10:58am
  So right, and one of Barry’s cronies on Wall Street will handle the sale and reap the rewards.
  
  Report this comment
- Joss
  Posted on December 19, 2012 at 11:05am
  I believe the correct price would be closer to $54/share. It’s only money (taxpayer money).
  
  Report this comment
- Cavallo
  Posted on December 19, 2012 at 11:12am
  GM will die again soon. I don’t believe they fixed any of their real problems. The volt and other half witted excursions will cost them. I’ll throw a party when Government Motors finally releases its final death rattle. The icing on that cake would be lots of UAW crying and weeping in the crime ridden trash filled streets of decrepit Detroit.
  
  Report this comment
termyt
Posted on December 19, 2012 at 10:50am
“’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.”

Oh, is that what it does? I’m glad you explained it because that’s not the impression I had at all.

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Al J Zira
Posted on December 19, 2012 at 10:47am
Since we’ve been so successful in opening up plants in China we feel it’s time to pay back some of the money we stole…….uh, I mean borrowed.

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RIGS
Posted on December 19, 2012 at 10:46am
GM will go bankrupt again inferior cars and will not be able to pay union pensions. Next two years the writings on the wall.

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RaydocX
Posted on December 19, 2012 at 10:45am
so the American taxpayers GAVE the company (and the Union) 15.3 BILLION dollars…
$15,300,000,000.00 over the last 3 years…

the hybrid cars they have made subsequently are too expensive to afford, and are not competetive in price with more established American and Foriegn models.

in fact, after taxes, it will be a very tight Christmas this year… we don’t have the money to buy an American Motors vehicle, even if we wanted. And we have jobs… unlike up to 13% of Americans.

The farce that ‘the President’ saved jobs with this money grab rankles, but the knowledge of just how much money we threw away to the Union makes the knowledge that our leaders are going to take even more money from working Americans for such bone headed wasteful policies is an outrage.

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- yougottabekidding
  Posted on December 19, 2012 at 10:59am
  We’re there any non union workers saved ( he said with tongue in cheek)
  
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kevin542
Posted on December 19, 2012 at 10:41am
So are “We The People” going to see any of this OUR money in the form of a tax payer stimulus gift…..preposterous you say…

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The_Jerk
Posted on December 19, 2012 at 10:40am
They’ll call this a success, when in the end it will cost the taxpayers $7 BILLION.

Duped again.

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- yougottabekidding
  Posted on December 19, 2012 at 10:54am
  If you were duped shame on you!
  53% of us knew better!
  
  Report this comment
- The_Jerk
  Posted on December 19, 2012 at 11:09am
  Yougottabekidding, it’s not how you played the game that matters. It’s who won, and who lost. We were duped. Like the 1919 World Series, the game was rigged. The game is rigged.
  
  http://mondoweiss.net/2010/05/kagan-appointment-shows-jews-are-the-new-wasps.html
  
  Report this comment
SquidVetOhio
Posted on December 19, 2012 at 10:37am
“Finally.Now about all of that money you still owe us….”

- U.S. Taxpayer

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- starman70
  Posted on December 19, 2012 at 10:47am
  This is the very reason I won’t ever buy a “Government Motors” car. Ford and others never received a “Bailout” and posted a loss to my taxpayer funds. Government Motors should be made to repay the government at the $50 per share rate and not let off the hook.
  
  Report this comment
- Landon410
  Posted on December 19, 2012 at 10:53am
  now about ALL the money you owe US – China
  
  Report this comment
- Cavallo
  Posted on December 19, 2012 at 11:07am
  I’ll never buy GM either. They’re forever tarnished as a Government Motors. I’ll stick with Toyota. The Japanese have yet to do me wrong. Ironic. GM will die again in the next 10 years, I’ll throw a party when it finally dies.
  
  Report this comment
- Marine25
  Posted on December 19, 2012 at 11:36am
  @ cavallo
  the Japanese have never done you wrong? What’s ironic about your statement is that while we were fighting the Japanese during World War II, GM led the largest commercial-to-military war production effort in American history. In 1942, the company converted all of factories to produce $12 billion worth of airplanes, trucks, tanks, guns, and shells for the US military. No other company delivered as much material to the Allied forces.
  That’s another reason we stepped in to help GM when there was no Wall Street money available, the company re-fitted their whole operation, 100%, when our country was in need. 70 years later GM was in need and we stepped in to help. Sorry about your lack of patriotism. Conservatives used to be all about the red, white, and blue. I wonder what happened to that.
  
  Report this comment
- SquidVetOhio
  Posted on December 19, 2012 at 1:34pm
  The pink-O Marine25 has to go back to WWII to bash the Japanese? Stretching much? My grandfather was awarded a purple heart fighting against the Japanese in WWII and yes, I still like the Japanese and their cars.
  
  Report this comment
IndyGuy
Posted on December 19, 2012 at 10:31am
“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,”
Too late idiot…

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- RightUnite
  Posted on December 19, 2012 at 10:45am
  You’re kidding about the successful auto industry rescue, right??
  
  Report this comment
- RightUnite
  Posted on December 19, 2012 at 10:46am
  Ah, I see you were being sarcastic!! Hehehehehe!
  
  Report this comment
- MCON29
  Posted on December 19, 2012 at 10:48am
  I wouldnt classify a multi-billion dollar loss as successful
  
  Report this comment

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