Government prepares to sell General Motors stock
|By TOM KRISHER and MARTIN CRUTSINGER, AP Business Writers|
Taxpayers are sure to lose billions of dollars in the deal, even though GM has bounced back from the darkest days of 2008, when it almost ran out of cash.
The company has racked
"This is very attractive to the company and to our shareholders," GM Chief Financial Officer
When the government sells its last GM shares, the
"There should be no expectation about getting back the taxpayers' money," said
Under the deal, GM will spend
That will leave the government with 300 million shares, or a 19 percent stake, which it plans to sell during the next 12 to 15 months. GM will fund the deal from its cash balance, which at the end of September was close to
"The auto industry rescue helped save more than a million jobs during a severe economic crisis," said
Treasury officials declined to answer questions from The Associated Press about why the government is selling now.
The government clearly waited until after the presidential election to unload the stake and close the bailout, which was a contested issue in the campaign between President
GM shares sold for
"The thinking is perhaps you sell some of it now, that starts to lift the overhang and that potentially allows a better exit (price) for the remaining shares," he said.
GM will buy the 200 million shares at
Breaking even would require selling the remaining 300 million shares for an average of about
The government bailed out GM during the financial crisis in 2008 and 2009, when the economy teetered on the brink of a depression. Without government help, the wheezing automaker would likely have been auctioned off in pieces. At the time, GM was a sick company, racking up more than
Even during GM's 2009 bankruptcy, government officials said they never expected to get all the bailout money back. Former auto czar
The government sold 412 million shares in the 2010 initial public offering. The shares rose shortly after the IPO, but then slid as the U.S. economic recovery faltered and
Even with the government ownership, GM has made money for 11 straight quarters. But there are signs of trouble. GM has lost money in
The company has never been prohibited from paying a dividend to shareholders, but so far has decided against it.
Government-ordered pay restrictions will remain in effect until the Treasury completes the sale of its remaining 19 percent stake. CEO
Although GM is paying a premium for the government shares, GM's other shareholders could benefit because the number of shares on the market will be reduced about 11 percent. That should increase the value of the remaining shares.
The bailouts of GM and rival Chrysler were part of the Troubled Asset Relief Program created by
Last week, Treasury sold its final shares of insurance giant
But in the end, TARP programs are expected to lose
Private economists rated the TARP effort as an unqualified success in stabilizing the banking system during the crisis.
"It was a slam-dunk success," Zandi said. "It was vitally necessary and proved to be a key to ending the financial panic and jump-starting an economic recovery." He expects the final government loss on TARP to be
"No one liked bailing out the banks," Zandi added. "But without a banking system on solid ground, the economy would have never found its footing."
Crutsinger reported from
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