Washington — The U.S. Treasury has begun selling the remainder of its 19 percent stake in General Motors Co.
On Jan. 18, the Treasury filed a written trading plan to sell its remaining 300.1 million shares of stock in the Detroit automaker. It plans to exit completely by March 2014 and said it could immediately begin selling small numbers of shares on the open market.
In a report to Congress, the Treasury said it had net proceeds of $156.4 million in January for the sale of GM stock during eight full trading days of the month. GM’s stock price ranged between $27.61 and $29.16 during the period, meaning Treasury sold at least 5.4 million shares, depending on the prices it received.
The Treasury has recovered $29 billion of its $49.5 billion bailout, according to the report. It swapped most of its bailout to GM awarded in 2008 and 2009 for a 61 percent majority stake in 2009. The government shed about half of its stake in GM’s November 2010 initial public offering.
When the government finally completely exits, GM will no longer be subject to the pay oversight of the Treasury. A House panel is set to hold a hearing Tuesday on executive pay at GM and other firms that received large bailouts.
On a quarterly basis, the Treasury plans to disclose how many share of GM stock it has sold and will report monthly its proceeds from the sale.
In December, the Treasury sold 200 million shares of its GM stock to the Detroit automaker for $5.5 billion, or $27.50 a share.
In order to prevent hedge funds and other investors from taking advantage, the Treasury doesn’t make the trading plan public.
The plan places limits on how much stock can be sold at any given time and at what prices. Government officials also can provide the banks with direction on when they should sell additional shares.
Last month, the Treasury named Citigroup Inc. and JPMorgan Chase & Co. to manage the sale.
The banks will get a 1 cent per share commission — or $3 million — for the sale of the entire stake.
The Treasury has said it “intends to sell its shares into the market in an orderly fashion and fully exit its remaining GM investment within the next 12-15 months, subject to market conditions.”
The government needs to get $72 per share for its remaining shares to break even on its $49.5 billion GM bailout. It initially held a 61 percent stake before selling about half of its shares in GM’s November 2010 IPO at $33 a share.
At current prices, the Treasury would lose more than $12 billion on its GM bailout.
Last week, the Treasury Department said its estimate of losses on the $85 billion auto bailout fell by 16 percent, or $4 billion, in large part because of a rebound in General Motors Co.’s stock price.
The Obama administration said in a report to Congress that its projected auto losses fell to $20.3 billion, from its prior quarterly estimate of $24.3 billion.
The Treasury in 2009 initially forecast it would lose $44 billion on its bailout of GM, Chrysler Group LLC and their finance arms. That forecast fell to $30 billion by the end of 2009 and fell as low as $14.3 billion in 2011.
The Treasury still holds a 74 percent stake in Ally Financial, the Detroit-based auto finance firm, as part of a $17.2 billion bailout, but hopes to eventually break even. Ally is shedding its foreign operations as part of its efforts to repay taxpayers.
David Shepardson, The Detroit News.
