Treasury to Sell 242 Million Shares of General Motors Common

The flag is at half-mast for U.S. taxpayers.

The U.S. Department of the Treasury said today that it is taking the next step in selling its remaining 241.7 million shares of General Motors (GM) common stock. Treasury intends to sell “through various means in an orderly fashion,” based on market conditions. (Read AutoInformed on Treasury Now Selling More General Motors Stock at a Loss)

To recover the full GM loan Treasury would have to sell the balance of GM shares at more than an average of $77 per share. GM is currently trading at ~$32 per share. This means that taxpayers will take a loss on bailout of GM. The question is just how much of one. Treasury lost on $1.3 billion on its Chrysler bailout.

In November 2010, GM completed an initial public offering, which yielded $13.5 billion in net proceeds for Treasury and reduced its stake in GM to 500.1 million remaining shares of GM common stock. Last December Treasury said it would fully exit its investment in General Motors within 12 to 15 months, subject to market conditions. Two days later, GM purchased 200 million shares of GM common stock from Treasury at $27.50 per share, –or a 7.9% premium over the closing price on 18 December 2012.

As of the end of March, Treasury reported to Congress that it recovered approximately $30.4 of the $49.5 billion – or 38.5% of the taxpayer investment in GM through repayments, sales of stock, dividends, interest, and other income.

This $30 billion only includes what Treasury has recovered from Old GM. The total amount that Treasury has recovered, including the investment in Old GM, the loan to GM to purchase GMAC rights, and loans for the Supplier and Warranty Programs is $30.73 billion.

“TARP’s emergency support to GM during the financial crisis was necessary to prevent the collapse of the American auto industry and save more than one million American jobs,” said Tim Massad, Treasury Assistant Secretary for Financial Stability.

See also: GM files SEC Paperwork to Ease Share Sales

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