A soft landing for taxpayers?
The U.S. Department of the Treasury said today it received $1.8 billion in additional payments from General Motors’ initial public offering (IPO), bringing overall net proceeds for taxpayers from the GM IPO to $13.5 billion.
On November 23, Treasury initially received $11.7 billion from the sale of 358,546,795 shares of common stock in GM’s IPO. The Wall Street underwriters of the offering had a 30-day option to purchase up to 53,782,019 additional shares of common stock from Treasury at the same price to cover “over-allotments.”
The underwriters exercised this over-allotment option on November 26, and Treasury today received $1.8 billion from the sale of those additional shares after Wall Street took its cut.
| U.S. Department of Treasury Ownership in the GM IPO | ||
| Shares Common
Stock Sold |
Net Proceeds $B | |
| Initial Sale | 358,546,795 | $11.7 |
| Over-Allotment | 53,782,019 | $1.8 |
| Total | 412,328,814 | $13.5 |
“General Motors’ IPO is a testament to that company’s turnaround and the significant progress we have made continuing to exit our investments and recover taxpayer dollars,” said Tim Massad, Acting Assistant Secretary for Financial Stability.
The exercise of the over-allotment option increased the overall amount of GM common stock that Treasury sold in the GM IPO to 412,328,814 shares.
In total, the GM IPO reduced Treasury’s ownership of GM’s outstanding common stock by nearly half from 60.8% to 33.3%.
| Treasury GM Investment | $ B | Return from GM | $ B |
| Pre-January 2009 | 13.4 | Net IPO Proceeds | 13.5 |
| Post-January 2009 | 36.1 | Debt Repayment | 6.7 |
| Proposed Preferred Stock Repurchase | 2.1 | ||
| Interest & Dividends | 0.8 | ||
| Total | $ 49.5 | Total | $ 23.1 |
U.S. taxpayers have invested a total of $49.5 billion in General Motors. In October, Treasury announced that it accepted an offer by GM to repurchase $2.1 billion of preferred stock – a transaction that is expected to occur in mid-December 2010. With this repurchase and the IPO, taxpayers will have received a total of $23.1 billion from GM through repayments, interest, and dividends since the company emerged from bankruptcy in July 2009. Following the IPO and the preferred stock repurchase, Treasury’s remaining stake in GM will consist of 500,065,254 shares of common stock.
The proceeds from the GM IPO bring the total amount of TARP funds that have been returned to taxpayers to nearly $254 billion, Treasury said in a statement.
| TARP Funds Returned to Taxpayers $B | |
| Repayments Prior to GM IPO | 204.3 |
| Profits from Dividends, Interest, Warrant Sales, and Other Income | 31.0 |
| Cancelled Commitments (Asset Guarantee Program) | 5.0 |
| GM IPO | 13.5 |
| Total | 253.8 |
