US government expects to sell remaining GM stock by year's end
The Canadian government sold a block of 30 million GM shares in September, valued at $1.1 billion.
DETROIT – The US government expects to sell the last of its stake in General Motors by the end of the year, bringing an end to a sad chapter in the 105-year-old auto giant’s history.
The Treasury Department said it still owns 31.1 million shares of the auto giant, less than 2%. It plans to sell them by Dec. 31, as long as the price holds up.
The US government received 912 million shares in exchange for a $49.5-billion bailout during the financial crisis in 2008 and 2009. So far it has recovered $38.4 billion of the money, but taxpayers would end up almost $10 billion short if the remaining shares are sold at current prices.
The Canadian and Ontario governments said in September they had sold a block of 30 million shares in General Motors valued at about C$1.1 billion, but continued to hold more than 119 million GM common shares and 16.1 million GM series A preferred stock through a federal agency.
So far they have not said specifically when more of their shares might go on the block.
“(Finance) Minister (Jim) Flaherty has said repeatedly that we will exit the government’s stake in General Motors in a timely manner,” his office said in an emailed. “We will divest because government shouldn’t be in the car business, but we will divest appropriately over time to ensure we maximize the return for Canadian taxpayers.
Canada currently holds 110,084,746 common shares of GM, representing 7.9% of outstanding shares, and 16,101,695 shares of GM Series A Preferred Stock
Both Ottawa and the Ontario government acquired GM shares in 2009 after providing C$10.6 billion in aid to bail the automaker out amid a recession that hit the auto industry particularly hard. The investment is held on behalf of the two governments by Canada GEN Investment Corp., a subsidiary of the Canada Development Investment Corp.
Like the Canadian government, the US governments said the bailouts of GM and were needed five years ago to save the auto industry and more than a million jobs. It never expected to get all of the money back.
The lack of government ownership should boost GM’s car and truck sales, North American President Mark Reuss said at the Los Angeles Auto Show.
Taxpayers’ initially got a 61% stake in GM in exchange for the bailout, which was needed because GM nearly ran out of cash and may have faced liquidation.
GM went through bankruptcy protection and was cleansed of most of its huge debt, while stockholders lost their investments. Since leaving bankruptcy in 2009, GM has been profitable for 15 straight quarters, racking up almost $20 billion in net income on new products and rising sales in North America and China. It has also invested $8.8 billion in US facilities and has added about 3,000 workers, bringing US employment to 80,000.
The company now is sitting on $26.8 billion in cash and is considering restoration of a dividend. It hasn’t paid US federal income taxes since leaving bankruptcy due to write-offs from accumulated net losses.
©The Canadian Press