GM Hopes To Buy Back Its Shares From US Treasury
During the 2009 bailout, the U.S. Treasury Department invested more than US$50 billion in General Motors through Troubled Asset Relief Program. It currently owns a 26.5 percent stake in the company, a fact that has led bailout and government opponents deriding GM as “Government Motors”.
Now that the company is up and running for good (sans its European operations) reclaiming the number one spot from Toyota in 2011 and is posting profits, it wants to buy back its shares.
According to a report from Autonews citing The Wall Street Journal, the Treasury Department is not willing to sell its stake back to GM at the current stock price.
The reason is that GM shares traded at US$24.14 last Friday and selling at this price means a loss of about US$15 billion. In order for the U.S. government to break even, GM stock price would have to more than double to US$53, although the WSJ said that the Treasury would consider selling at a price “in the US$30s”.
“The Treasury will make its own decisions about their stake in the company like any other owner,” a GM spokesperson told the newspaper. “Our job is to produce great cars and solid profits.”
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