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GM to purchase 200M shares owned by feds



Published: Thu, December 20, 2012 @ 12:00 a.m.

By Burton Speakman

bspeakman@vindy.com

LORDSTOWN

General Motors plans to purchase 200 million shares of the company currently owned by the federal government for $5.5 billion, although the sale will still result in billions of dollars in losses for taxpayers.

GM will pay $27.50 for the stocks, which are being held by the U.S. Department of the Treasury. The treasury department plans to sell its remaining 300 million shares in GM on the open market in the next 12 to 15 months. This means the government will no longer own any stock in GM.

GM payment for the stock is about an 8 percent premium over Tuesday’s closing price of $25.49. The shares went up about 7 percent to $27.30 in Wednesday morning trading.

The government is almost certain to lose billions on the $49.5 billion bailout that saved GM from being auctioned off in pieces during the financial crisis in 2008 and 2009.

The Treasury department says it will have recouped about $28.7 billion after GM completes its buyback. So, to break even, the department would have to sell the remaining 300 million shares for an average of about $70 each.

This decision shows “in three short years” GM has recovered enough to go on its own, said Glenn Johnson, president of United Auto Workers Local 1112 in Lordstown.

“The government, like any other stockholder, had the ability to sit on the stock longer and wait for the price to go up,” he said. “The company had a good reason for offering the deal; and the government must have had a good reason to accept.”

The stock increase after the announcement shows the public thought the decision by GM and the government was correct, Johnson said. “Hopefully, the announcement and stock increase that came with it will help the government recoup more money when those shares are sold,” said Dave Green, president of UAW Local 1714 at Lordstown. “I think a lot of people wanted to see the government get out of the auto business.”

“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,” said Dan Akerson, chairman and CEO of GM.

The office of U.S. Rep. Tim Ryan of Niles, D-17th, issued this statement about GM buying back stock and the corresponding sale: “The Treasury announcement of the sale of GM stock validates what we have been saying all along — the rescue package kept our auto industry solvent and our auto workers on the job.”

An Associated Press report contributed to this story.


Comments

1redeye1(4699 comments)posted 2 years ago

And the U.S. taxpayers will take a major hit. Yeah Timmy, typical demoncrat money management,( that's why we are 16 trillion in debt). the stimulis plan worked But for who? The middle class will be paying off this loan for years to come Thanks Timmy! Just another example of Obammy flawed economics.. If i
have some shares in my company that I would like to sell for Sixty dollars a share to the Gov't and then buy them back at five dollars .Do we have a deal! What a SCAM!!!!!!

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2commoncitizen(961 comments)posted 2 years ago

What in the hell is Ryan talking about?? First the taxpayers paid to keep GM from going broke because of bad management and union greed, Now the taxpayers are being penalized,again, because the Treasury Dept wants to sell the GM stock at a loss? If GM wants to "buy" back the government owned stock they should have to pay the amount that would be equal for the government to at least "break even"
What a rip off the the taxpayers

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3uselesseater(229 comments)posted 2 years ago

Nice, the government is selling shares at a loss. As if the government can't sit and wait.

What's going on? GM implosion part 2 coming?

$49.5 billion given, $28.7 repaid = $20.8 billion loss.

How about the IRS just loses $20 billion in taxes owed by hardworking citizens? That would never happen, would it?

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4redvert(2100 comments)posted 2 years ago


"The government can do what they went to."

You deserve to be invited to the inauguration. obowser loves naive people like you!

ps: Want, not went, apparently reading what you wrote before posting is over your head!

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5redeye1(4699 comments)posted 2 years ago

@vinytalk is your typical liberal ( NO COMMON SENSE) who thinks its okay for the Gov't to waste or lose taxpayers monies. I'll bet he or a family member of his works for Government Motors

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6Silence_Dogood(1384 comments)posted 2 years ago

"$49.5 billion given, $28.7 repaid = $20.8 billion loss."

The correct wording should be as follows.

49.5 billion given, $28.7 repaid = $20.8 billion GIFT.

Political payback, post election,at the taxpayers expense of course.

Ford Motor Corp. should be asking for a GIFT of equal value just to make sure the Government is not favoring one Company over another.

NEVER AGAIN WILL I BUY A GM PRODUCT.

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