General Motors
announced in a press release today that it plans to buy 200 million shares of its own common stock back from the US Department of the Treasury, for $27.50 per share – some $5.5 billion in total. The transaction is expected to close before the end of the year. The move by the Treasury marks a significant first step in a plan to divest itself of GM holding entirely over the course of the next 12 to 15 months, "subject to market conditions."

After this large buyback, the Treasury will still hold some 300 million shares of the automaker's stock – roughly equal to a 19-percent stake. Treasury officials say that sale of the rest of the shares will begin as early as next month, "through various means and in an orderly fashion." The government plans to fully divest itself of GM shares over the next 12 to 15 months.

The $27.50 per share figure represents an eight-percent premium over the current share price, and was agreed upon after negotiations between GM and Treasury officials.

Previously, the government department had seemed reluctant to sell off its post-bailout stake in GM, as to do so at current market prices would mean a large loss of investment for the Treasury. Reports have varied, but it the "break even" point for the government has usually been pegged at roughly $50 per share.

According to the Treasury's own press release, the government invested a total of $49.5 billion in 2008 and 2009 to help secure GM. With this latest buyback added in, the agency has "more than $28.7 billion" of its original investment.

Find press releases from both the Treasury Department and GM, below.
Show full PR text
Treasury Announces Intent to Fully Exit GM Investment Within the Next 12-15 Months

12/19/2012

WASHINGTON – Today, as part of its continuing efforts to wind down its investments in the Troubled Asset Relief Program (TARP), the U.S. Department of the Treasury announced its intent to fully exit its investment in General Motors (GM) within the next 12-15 months, subject to market conditions.

Treasury currently holds 500.1 million shares of GM common stock. Treasury intends to exit that investment through the following means:
GM will purchase 200 million shares of GM common stock from Treasury at $27.50 per share. This transaction is expected to close by the end of the year.
Treasury intends to sell its other remaining 300.1 million shares through various means in an orderly fashion within the next 12-15 months, subject to market conditions. Treasury intends to begin its disposition of those 300.1 million common shares as soon as January 2013 pursuant to a pre-arranged written trading plan. The manner, amount, and timing of the sales under the plan are dependent upon a number of factors.

Earlier this week, Treasury announced that it expected to make significant additional progress winding down TARP's bank programs in 2013. Last week, Treasury sold its final shares of AIG common stock. Overall, to date, through repayments and other income, Treasury has recovered more than 90 percent ($381 billion) of the $418 billion in funds disbursed for TARP.

"The auto industry rescue helped save more than a million jobs during a severe economic crisis, but TARP was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time," said Assistant Secretary for Financial Stability Timothy G. Massad. "Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests."

In 2008 and 2009, Treasury invested a total of $49.5 billion to help stabilize and restructure GM – as part of a broader rescue of the American automotive industry during a severe economic crisis. Including GM's purchase of common stock from Treasury announced today, Treasury has recovered more than $28.7 billion of its investment in GM to date through repayments, sales of stock, dividends, interest, and other income.

According to independent estimates, the rescue of the American auto industry helped save more than 1 million jobs. Moreover, since June 2009, the auto industry has added a quarter of a million new jobs. For details on Treasury's lifetime cost estimates for TARP programs, please visit Treasury's Monthly 105(a) Report to Congress on TARP at this link.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any shares of GM common stock, nor shall there be any offer, solicitation or sale of shares of GM common stock in the United States, any state thereof or any other jurisdiction in which such offer, solicitation, or sale would be unlawful absent registration or qualification under applicable securities laws or an applicable exemption from such registration or qualification requirements.


GM to Buy Back Stock from U.S. Treasury Department
U.S. intends to fully exit GM investment within 12-15 months


DETROIT - General Motors today said it will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion, or $27.50 per share. The share buyback is part of the Treasury's plan, also announced today, to fully exit its entire holdings of GM stock within 12 to 15 months, subject to market conditions.

Treasury has announced its intention to sell its remaining shares of common stock into the market through various means and in an orderly fashion. Treasury intends to begin its disposition of its remaining shares as soon as January 2013, consistent with a pre-arranged written trading plan. In addition, Treasury has agreed to relinquish certain governance rights that were included in the U.S. Treasury Secured Credit Agreement with GM.

"This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM's progress and our future," said Dan Akerson, chairman and CEO of GM.

Dan Ammann, senior vice president and CFO added, "A fortress balance sheet has been a pillar of GM's financial strategy and has enabled us to undertake today's actions. GM's balance sheet will remain very strong, with estimated liquidity of approximately $38 billion at the end of 2012, following the closing of the share buyback."

The repurchase price of $27.50 per share represents a 7.9 percent premium over the closing price on December 18, 2012. The share buyback is expected to close by the end of the year. This transaction will be accretive to earnings per share, as GM's total shares outstanding on a fully diluted basis will be reduced by approximately 11 percent. In association with this share buyback, GM expects to take a charge of approximately $400 million in the fourth quarter, which will be treated as a special item.

After the repurchase, Treasury will continue to own approximately 300 million shares of GM common stock, or approximately 19 percent of the outstanding shares on a fully diluted basis. Government ownership of GM stock was the result of the auto industry rescue that began under President George W. Bush in 2008 and which was expanded by President Barack Obama in 2009.

The industry in general, and GM in particular, have rebounded sharply since the rescue. Since the rescue, GM has announced investments of more than $7.3 billion in the U.S. and created or retained more than 20,000 jobs.

"We come to work every day grateful that taxpayers from the US and Canada stepped forward to rescue our industry, and determined to show this extraordinary help was worth it," Akerson said.


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    • 1 Second Ago
  • 108 Comments
      OptimusPrimeRib
      • 2 Years Ago
      How come nobody on the right complains about the $7.7 trillion the banks got and the ones that caused the mess escaped with billions? That makes the auto bailout look like chump change
        J
        • 2 Years Ago
        @OptimusPrimeRib
        Almost all of the bank money has been repaid. I believe it's only a few "smaller" banks that still have outstanding balances. The gov't actually made money on those bailouts. GM and Ally (formerly known as GMAC) are major losses on the bailout balance sheet. That's why people still complain about them.
        Camaroman101
        • 2 Years Ago
        @OptimusPrimeRib
        thats cause GM is easy to target as a scapegoat.
          • 2 Years Ago
          @Camaroman101
          [blocked]
      muspod
      • 2 Years Ago
      Good news Government Motors it giving the gov some of their money back. Bad news is the gov't didn't make jack (taking a loss) doing it.Probably would of been better to let them go through bankruptcy and get rid of the crap they still have.
        Josh
        • 2 Years Ago
        @muspod
        Yep - 'didn't make jack', except keep its mighty home grown industrial might. How people quickly forget their history.
        Britt Benston
        • 2 Years Ago
        @muspod
        GM made jobs since the bailout, and kept many more.
        johnb
        • 2 Years Ago
        @muspod
        they did go through bankruptcy.
      Ben Doolittle
      • 2 Years Ago
      Does this mean we can stop the 'Government Motors' cliche?
        michigan
        • 2 Years Ago
        @Ben Doolittle
        No
        Matt
        • 2 Years Ago
        @Ben Doolittle
        Sadly, the idiots that still use that tagline will probably continue to use it for years to come because they believe it makes them sound witty and educated. It wasn't funny the first time, and it isn't the 1,000,000th time.
          A_Guy
          • 2 Years Ago
          @Matt
          'conservatives' love using terms they hear on talk shows in an attempt to hide their ignorance on a subject. That's why you hear words being thrown around like socialist, communist, government motors, obamacare.... There is always some catchy term they cling to.
        Basil Exposition
        • 2 Years Ago
        @Ben Doolittle
        The trolls better get to work on a new obnoxious tagline to wear out.
      darkness
      • 2 Years Ago
      And Obama won Time person of the year......tragic day for republicans.
        mapoftazifosho
        • 2 Years Ago
        @darkness
        I voted for the guy, but person of the year is a stretch. His peace prize is also a stretch. Our drone operations in the Middle East have killed thousands of innocent people since Obama took over...so much for peace... Sorry, off topic rant/
          • 2 Years Ago
          @mapoftazifosho
          [blocked]
        Basil Exposition
        • 2 Years Ago
        @darkness
        A couple of fun facts: -Since 1933, every president but one (Ford) has been Time Person of the Year -Adolf Hitler was Time Person of the Year in 1938 So tell me, how is this a tragic day for Republicans?
          • 2 Years Ago
          @Basil Exposition
          [blocked]
          • 2 Years Ago
          @Basil Exposition
          [blocked]
      • 2 Years Ago
      [blocked]
        kontroll
        • 2 Years Ago
        are you talking to yourself moron, because it looks like GM is not listening to you.?? Tell your american compatriots not to go to Don Quixhote type wars all over the world where there is absolutely no business of the US to be if you want to save trillions of taxpayer dollars, stupid person
          Jerry
          • 2 Years Ago
          @kontroll
          I like the Dob Quixhote reference! Going to use that one!
      • 2 Years Ago
      [blocked]
      Matteo239
      • 2 Years Ago
      So does this mean that the Gov. agreed to this? If so, bunch of BS.... basically saying that the auto bail out failed because we are loosing money on our investment!
        Brodz
        • 2 Years Ago
        @Matteo239
        To say something so ignorant shows how silly you are. How much tax has come back into Government coffers from thousands of people keeping their jobs. Not to mention all the other tax GM itself pays. And the flow on affect to suppliers, and other industries that support the automotive one. Can no one see this?
          J
          • 2 Years Ago
          @Brodz
          $50 a share would be "paying it back." $27.50 is just cutting our losses.
          tnsubie
          • 2 Years Ago
          @Brodz
          People with educated, realistic economic views see it.
          Matteo239
          • 2 Years Ago
          @Brodz
          Can you please show me the math that proves your point. Because I assure you all those taxes paid would never add up to the bailout amount. Next time, before you call someone ignorant or silly, do your math. Thanks and have a nice day!
          The_Zachalope
          • 2 Years Ago
          @Brodz
          @Matteo Reports from before the bailout stated one-million people would be affected if GM went under. If we use that number, and assume that all of these people make on average $40,000/yr, and pay 20% of their income in taxes, that comes out to $8 Billion. (Which is a highly conservative number) Since the bailout occurred in the summer of 2009, and if we close out this tax year, this would be a total of $24 Billion.
          RGT881
          • 2 Years Ago
          @Brodz
          I see your point, but the tax revenue has not exceeded the bailout, so no government didn't make money on this. Moreover, liabilities from Old GM still exist.
        dan1malk
        • 2 Years Ago
        @Matteo239
        Yeah!!!! How dare they pay that money back!!!! What do they think this is, a loan?
          J
          • 2 Years Ago
          @dan1malk
          $50 a share would be "paying it back." $27.50 is just cutting our losses.
      • 2 Years Ago
      [blocked]
        NoBoost
        • 2 Years Ago
        I'm not disagreeing with your point, GM is apart of America and it would have been a loss to us all to have them go under. I'd just state that while Intel might assemble or test their products overseas, most of their multi-billion dollar Fabs (usually 4-5+ billion to create) are here in the US. Though not all of its design houses are in the US.
      detroit.trash
      • 2 Years Ago
      Meh... The taxpayers OWED GM a bailout anyway. I mean, after 30 years of supporting legislation and business/purchasing practices that were all but designed to destroy Detroit, it's the LEAST they could do. Just my $0.02 Good to see Big Brother being shown the door, though.
      luigi.tony
      • 2 Years Ago
      And how on earth did GM swing the sweetheart deal to not pay taxes? How can I get in on that?
        kontroll
        • 2 Years Ago
        @luigi.tony
        you're too stupid to not pay taxes...in the mean time I'm sure you help the japanese ot korean tax base by buying their POS and sending my dollars to asia...MORON
      Dump
      • 2 Years Ago
      OK, the govt stepped in to save some really critical companies. Usually, in times of economical downturns, govt aid isn't expected to be fully repaid as the govt aid is given to keep the economy moving, not to make a profit. When the govt bailed out the automakers, realistically, no one should have expected the govt to have been repaid in-full for the funding provided. Likewise, the govt's funding to AIG was to help soften the financial "blow" to the world markets. Other countries decided not to respond as quickly as the US did & so they are now feeling the economic pains more so than what the US had endured. GM needs to continue to work to either buy those shares back or make sure any possible buyer is supportive of their industry & the life of that company as well.
        • 2 Years Ago
        @Dump
        [blocked]
        kontroll
        • 2 Years Ago
        @Dump
        for those who can't stop bitching and are still foaming at the mouth about the Government's intervention in various companies, it is important to mention that the US government made a huge profit on the AIG "bailout"
          • 2 Years Ago
          @kontroll
          [blocked]
        Matt
        • 2 Years Ago
        @Dump
        Well said.
      Michael Sexton
      • 2 Years Ago
      All you hates can't wait to see a GM blog so you can spew your BS. Grow the F up and be happy they're doing better. You people ruin blogs with your negative views 24/7..
        • 2 Years Ago
        @Michael Sexton
        [blocked]
        Big Squid
        • 2 Years Ago
        @Michael Sexton
        Yeah, grow the F up, bend over, and spread 'em. Be grateful for what you are about to receive.
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