The US Treasury has announced it intends to sell its remaining stake in General Motors.
In the deal, General Motors Company (NYSE:GM) will be purchasing 200 million shares at $27.50 – a 7.9 percent premium. The deal should be closed by the end of the year. The remaining 300 million shares may be sold as soon as January, depending on market conditions.
The announcement of the sale of General Motors Company (NYSE:GM) stock was made by the US Treasury Department on Wednesday and comes only a week after the Obama administration sold off its entire stake in the American International Group, Inc. (NYSE:AIG)– yet another controversial bail-out made during the financial crisis.
Obama’s administration helped to rescue General Motors and Chrysler in mid-2009 economic meltdown, as the automakers struggled during the financial down turn. In an attempt to avoid liquidation of the companies – which the government said would mean the loss of one million jobs – the Treasury Department stepped in to offer financial aid.
General Motors received $51 billion from the US Treasury as a part of its bankruptcy. The US Treasury has already recouped more than $24 billion of its original investment in the automaker, although the investment in General Motors is not expected to be profitable – the break-even price point is estimated at around $53 per share. The loss, however, was planned to be offset by the AIG rescue as well as the bank re-capitalization program.
Yesterday’s news of the sale marks the removal of one more reminder of the crisis, and is sure to be welcomed by General Motors who are more than keen to remove the perception of government involvement in the company.
Dan Ammann, chief financial officer at General Motors, told reporters: “It obviously brings some clarity and certainty to the US Treasury exit,”
“It’s obviously good for the business in terms of continuing to remove the perception of government involvement in the company which is going to be good for sales.
General Motors Company (NYSE:GM) closed at $25.49 on Tuesday after rising 2.6 percent. The company has gained 26 percent this year.