Autoblog

Treasury to begin selling off more GM stock

Jonathon Ramsey — Thu, 09 May 2013 09:29:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Reuters reports that earlier this week the US Treasury announced the sale of another tranche of General Motors stock. It didn't say how many of the 241.7 million shares it holds in the automaker it would sell, nor exactly when - the discretion apparently intended to keep hedge funds from profiting from the situation. The government's ownership is broken down into common and diluted shares, representing close to 18 percent of the company at the moment, down from the 60.8 percent it owned in 2009 after GM's bankruptcy. This follows a share sale in February, when Treasury sold 17.2 million shares for $489 million.

Although GM's share price is nowhere near the $70-per-share or so that Treasury would need to break even, the department has reiterated that the point of the Troubled Asset Relief Program (TARP) wasn't to make money but to save jobs. GM's share price has, however, almost edged back to its November 2012 IPO price of $33. At the time of writing, shares were trading for $32.10. Based on the timetable Treasury gave in December, it should be fully divested of its GM ownership within a year from now.

Treasury to begin selling off more GM stock originally appeared on Autoblog on Thu, 09 May 2013 09:29:00 EST. Please see our terms for use of feeds.

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Treasury says auto bailout tally drops to $20.3 billion

Jonathon Ramsey — Tue, 12 Feb 2013 18:00:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

In December, the US Treasury announced that it was going to sell all of its shares in General Motors within 12 to 15 months. The first tranche of the 500-million total shares was purchased by GM, which took 200 million of them at $27.50 per share. That price represents an eight-percent premium over the market price at the time. The remaining 300 million shares will be sold "through various means in an orderly fashion."

Of the $418 billion disbursed through the Troubled Asset Relief Program (TARP), a report in Automotive News indicates that "about 93 percent" has been paid back, and the latest figures put Treasury's loss from the program overall at $55.58 billion. That's a $4.1 billion improvement on the last figure, when the expected red ink added up to $59.68 billion. The auto industry's portion of that loss is estimated to be $20.3 billion, a 16-percent drop from the earlier estimate of $24.3 billion.

The Treasury now owns 19 percent of GM, but if all goes well, there will be no more cause for anyone to utter "Government Motors" by the end of Q1 next year. A loss of some kind is still expected, however. Although GM's stock price is close to $29 at the time of this writing, that's still $4 below its IPO price and well below the $72 share price necessary for the government to come out even on its GM investment. On second thought, maybe the ribbing will continue.

Treasury says auto bailout tally drops to $20.3 billion originally appeared on Autoblog on Tue, 12 Feb 2013 18:00:00 EST. Please see our terms for use of feeds.

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Former CEO Whitacre urges Treasury to sell stake in General Motors

Seyth Miersma — Thu, 20 Sep 2012 13:45:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Former General Motors chairman and CEO Ed Whitacre is in the papers today, specifically the Opinion section of The Wall Street Journal, espousing a strong belief that the U.S. Treasury should get out of GM's hair as quickly as possible. Whitacre's sentiments come, no doubt, as a response to the recent news that GM has been pressuring the Treasury to sell off its remaining 500 million shares of the company's stock.

In the op-ed piece, Whitacre is careful to express just how important the U.S. Government's bailout - an initiative known as the Troubled Asset Relief Program, or TARP - was when $50 billion was added to the company coffers in 2009. But he goes on to say that government involvement has long since run its useful course, and its presence is now serving to hold back the automaker, rather than serve to secure the U.S. public's investment.

Writes Whitacre, pointedly, about the continued involvement of TARP regulators at GM, "The company already answers to a lot of constituencies: stockholders, unions, Wall Street and global competitors. Adding TARP to the mix for another few years, or even another few quarters, is not fair to GM or to the one million people it employs, directly and indirectly."

Whichever side of this debate you happen to fall on, it's well worth taking the time to read Whitacre's words in full, over at the WSJ's site.

Former CEO Whitacre urges Treasury to sell stake in General Motors originally appeared on Autoblog on Thu, 20 Sep 2012 13:45:00 EST. Please see our terms for use of feeds.

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Bush says he'd pull the trigger on auto bailouts again

Zach Bowman — Tue, 07 Feb 2012 10:29:00 EST

Filed under: Government/Legal, Chrysler, GM

President George W. Bush recently spoke to a gathering of auto dealers in Las Vegas, saying that while he believes in the free market under normal conditions, he doesn't regret the $700 billion bailout fund used to rescue General Motors and Chrysler from the brink of collapse. Bush was quoted as saying he'd do it again, and that he didn't want there to be a 21 percent unemployment rate. The former leader avoided addressing remarks from the current gaggle of Republican presidential candidates who have criticized his decision to lend a hand to banks, insurers and automakers.

"If you make a bad decision, you ought to pay," Bush said. "Sometimes circumstances get in the way of philosophy."

Bush championed a $17.4 billion bailout for the two automakers in December of 2008 as part of the $700 billion Troubled Asset Relief Program. Republican presidential candidate Mitt Romney has said both Bush and current President Barack Obama were mistaken in bailing out the auto industry. Instead, Romney believes GM and Chrysler should have been allowed to go into a controlled bankruptcy from the start.

Bush says he'd pull the trigger on auto bailouts again originally appeared on Autoblog on Tue, 07 Feb 2012 10:29:00 EST. Please see our terms for use of feeds.

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Report: General Motors eligible for a tax break of up to $45B

Jeff Glucker — Fri, 05 Nov 2010 17:45:00 EST

Filed under: GM, Earnings/Financials

They say that only certain things in life are death and taxes. General Motors already escaped one of the two, and now it's getting a big break on the other - as part of GM's restructuring plan, it's eligible for up to $45 billion in tax breaks. Under the Troubled Asset Relief Program (TARP), General Motors can utilizes its pre-bankruptcy losses to offset future tax liabilities. This should provide a large dose of financial help for the automaker, as it goes forward with its IPO and works to pay back the US and Canadian tax-paying public.

[Source: Automotive News - sub. req. | Image: Paul Sancya/AP Photo]

Report: General Motors eligible for a tax break of up to $45B originally appeared on Autoblog on Fri, 05 Nov 2010 17:45:00 EST. Please see our terms for use of feeds.

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Report: Congressional panel doubts GMAC business case, suggests breakup

Jeremy Korzeniewski — Fri, 12 Mar 2010 13:58:00 EST

Filed under: Government/Legal, Earnings/Financials

"The panel is deeply concerned that Treasury has not required GMAC to lay out a clear path to viability or a strategy for fully repaying taxpayers." This, according to a Congressional Oversight Panel that was created as a watchdog for the U.S. Treasury's Troubled Asset Relief Program (TARP) funds. The fix? Potentially breaking GMAC up into units and merging its auto lending business back into General Motors.

As a refresher, the Treasury invested $17.2 billion in TARP funds into GMAC, after which the financial company lost $8.3 billion on its Residential Capital unit in 2009. For it's part, Treasury has responded to the panel in a statement, saying, "Treasury continues to be a reluctant shareholder and to manage its investment in GMAC in a hands-off commercial manner consistent with the administration's established principles that guide Treasury's management of financial interests in private firms."

And since we've heard from the congressional panel and Treasury, why not from GMAC itself? Again, from a statement as reported to Automotive News: "We appreciate the panel's responsibility to analyze history; however, GMAC's management team is focused on the future. That includes continuing to provide the highest level of service to auto dealers and consumers in support of our auto partners, returning GMAC to a high level of profitability, and repaying the U.S. Treasury."

At this point, there's no clear indication on how Treasury or the congressional panel will proceed. Regardless, this is an issue that we'll be keeping a close eye on in the coming weeks. Stay tuned.

[Source: Automotive News - sub. req'd. | Image: Craig Jones/Getty]

Report: Congressional panel doubts GMAC business case, suggests breakup originally appeared on Autoblog on Fri, 12 Mar 2010 13:58:00 EST. Please see our terms for use of feeds.

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REPORT: Chrysler Financial repays $1.5B in government loans

Damon Lavrinc — Tue, 14 Jul 2009 17:34:00 EST

Filed under: Government/Legal, Chrysler

According to a variety of reports, Chrysler Financial has reimbursed the $1.5 billion it was loaned on January 16 through the Treasury Department's Troubled Asset Relief Program (TARP) - making Chrysler's financial arm the first auto-sector company to pay back its government loans.

Chrysler Financial says it used the funding to provide more thatn 85,000 consumer loans for vehicle purchases and said the quick pay-off was due to provisions contained withn the loan that would increase costs over time.

Although Chrysler Financial is still offering insurance and financial products to consumers at dealerships, GMAC Financial Services replaced Chrysler Financial as the automaker's preferred lender when the Pentastar people filed for Chapter 11 earlier this year.

[Source: Reuters]

REPORT: Chrysler Financial repays $1.5B in government loans originally appeared on Autoblog on Tue, 14 Jul 2009 17:34:00 EST. Please see our terms for use of feeds.

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REPORT: Unsigned waivers to blame for Chrysler Financial rejection of gov't cash

Frank Filipponio — Tue, 21 Apr 2009 11:40:00 EST

Filed under: Government/Legal, Chrysler, Earnings/Financials

Over the past two days, we've told you what we've heard about the latest short-term federal aid coming to Chrysler and GM. According to the latest reports, it will be $5B to the latter and $500M to the former. We also mentioned it had been reported that Chrysler Financial had inexplicably turned down an additional $750M in government aid during this most recent round of handouts. It had been speculated that it was because of a refusal by CF execs to sign off on executive compensation limits in the terms of the government agreement.

Although CF denied it, the fact that they appeared to be going elsewhere for additional loan money seemed to confirm that they might not have been entirely happy with the terms of the government handout. Well, The Detroit Free Press is now reporting that a recently released report by the special inspector general's office confirms that unsigned waivers were the real reason behind the rejection. The Freep is reporting that at least some of the top 25 executives at CF "refused to sign waivers releasing the Treasury Department and the company from legal responsibility for placing strict limits on executive compensation."

Even without the three-quarter-billion-dollar handout to CF, a total of $13.4B has been given to GM and Chrysler out off the $17.4B in loans President George W. Bush authorized back in December. Meanwhile, President Obama has continued to add restrictions to these handouts, rejecting the initial restructuring plans from both companies, essentially firing Rick Wagoner and telling Chrysler to make a deal with Fiat. While Chrysler has until next Wednesday to finish that deal, CF has apparently turned down the funding over the waiver issue, which had been added early this month.

[Source: Detroit Free Press]

REPORT: Unsigned waivers to blame for Chrysler Financial rejection of gov't cash originally appeared on Autoblog on Tue, 21 Apr 2009 11:40:00 EST. Please see our terms for use of feeds.

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REPORT: GM to get $5B, Chrysler $500M from gov't

Frank Filipponio — Tue, 21 Apr 2009 09:59:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials, Rumormill

Is General Motors about to get an additional $5 billlion from the Feds? Will Chrysler be getting another $500 million? The Detroit News seems to think so. Citing Obama Administration sources and a leaked 250-page government report, they say that those figures are accurate. The money will reportedly come in the form of short-term aid via the $700B Troubled Asset Relief Program (TARP). One group we know won't be taking any additional TARP money is Chrysler Financial, allegedly refusing an additional $750M over restrictions on executive compensation included in the agreement.

Reading through the report a bit, The Detroit News also discovered some additional figures. The report says that the Treasury Department has already spent $24.8B on the automotive portion of their program (out of $25B allotted). Of that amount, $13.4B has gone to GM, $4B to Chrysler, almost $6B to GMAC and $1.5B to Chrysler Financial. An additional $1.25B will be used to pay for that warranty guarantee program designed to back the warranties of GM and Chrysler vehicles should either company go under.

There has been no confirmation from Washington yet, but you can bet we'll report it when it becomes official.

[Source: The Detroit News]

REPORT: GM to get $5B, Chrysler $500M from gov't originally appeared on Autoblog on Tue, 21 Apr 2009 09:59:00 EST. Please see our terms for use of feeds.

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BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package

Chris Paukert — Fri, 19 Dec 2008 09:32:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

President George W. Bush will doubtlessly be remembered for many things things, but his parting legacy may yet be his eleventh-hour pledge of $17.4 billion in low-interest loans to General Motors and Chrysler (Ford Motor Company has said it does not require relief at this time).

The funding will reportedly come from the Troubled Asset Relief Program (TARP), the financial industry bailout package signed off on this fall. Up front, the White House will earmark $17.4 billion in short-term financing for December and January, and in February, another $4 billion will be disbursed, provided it can draw the funds from the second half of TARP's $700 billion.

More details are doubtlessly coming, but the bridge loans appear to hinge largely on whether General Motors and Chrysler are deemed "viable" enterprises by the government. In the terms of the agreement, that means that the automakers must prove whether they have a "positive net present value, taking into account all current and future costs, and can fully repay the government loan." There's no word yet on how they will prove said viability, but we expect to learn more soon. In the meantime, expect for both General Motors and Chrysler to stick to their previous production suspension announcements.

Politico has more specifics on the bailout here.

UPDATE: Press releases from General Motors, Ford and Chrysler have been added after the jump.

[Sources: ABC NEWS, Politico, Photo by Brendan Hoffman/Getty]

Continue reading BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package

BREAKING: Bush greenlights $17.4 billion Auto Rescue/Bailout package originally appeared on Autoblog on Fri, 19 Dec 2008 09:32:00 EST. Please see our terms for use of feeds.

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