US plans further sale of GM stake
Baku, May 8 (AZERTAC). The US Treasury has signalled its determination to bring to an end one of the US government`s biggest industrial interventions in decades by offloading all of its remaining stake in General Motors, presently valued at $7.75bn.
The announcement follows GM`s $5.5bn buyback in December of 40 per cent of the government`s outstanding stake in the US carmaker, which it rescued in 2009 in the depths of the financial crisis.
Citigroup and JPMorgan, the banks acting on the government`s behalf in the sale, have since sold all the 58.3m shares - a 4.3 per cent stake - that they had existing authority to sell. However, those sales ended on April 11, when the two banks reached the limit of their existing authority.
The announcement on Monday said the Treasury was taking the “next step” by issuing a “second predefined written trading plan” that would allow the Treasury to sell the next batch of its remaining 241.7m shares.
Tim Massad, the Treasury`s assistant secretary for financial stability, said the government was “pleased with the progress to date” in the sale.
“We . . . will continue exiting this investment in accordance with our previously announced plan and timetable, and in a manner that maximises returns for taxpayers,” he said.
A person familiar with the matter said future sales would follow the same pattern of sales that the government had been pursuing since December. The Treasury continued to plan to dispose of its remaining stake through gradual open-market sales over 12 to 15 months starting last December, he added.
The Treasury said that, not counting housing-related programmes, it had disbursed $412bn under Tarp and had already recovered $414bn.
GM made December`s repurchase at $27.50 a share, a premium to the $25.49 share price on the day of the deal`s announcement. However, GM has performed strongly since that announcement, increasing its sales of pick-up trucks and sports utility vehicles particularly fast. The shares stood at $32.08 on Monday, down 1 cent, making the Treasury`s remaining stake worth $7.75bn.
GM`s top executives have been keen to end the links between the company and the US government, which have led to its being nicknamed “Government Motors”.
Chrysler, the other big US carmaker to receive help under Tarp, repaid all the loans it received early. The company is now controlled by Italy`s Fiat.
Both GM, the US`s biggest domestic carmaker by sales, and Chrysler, the third-biggest, went through government-managed bankruptcies in 2009 as they restructured their obligations to creditors and employees.
Ford, the US`s second-biggest carmaker by sales, avoided bankruptcy, having restructured its finances immediately before the start of the financial crisis.
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