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GM buys back stock, will end U.S government ownership

 GM buys back stock, will end U.S government ownership
GM World Headquarters at the Renaissance Center in Detroit, Michigan

Remaining government shares will be sold within 12 to 15 months

The sad saga of General Motor's bankruptcy is coming to a close as the company has announced plans to buy 200 million shares of stock from the U.S. Department of the Treasury.

The company will pay $27.50 per share which makes the deal worth $5.5 (€4.1 / £3.4) billion. This will reduce the Treasury's ownership to approximately 300 million shares which is roughly 19 percent of the company. The government plans to fully divest their remaining shares within 12 to 15 months, depending on market conditions.

In a statement, GM CEO Dan Akerson said "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.” He added, “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."

Source: GM

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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Comments (7)

axual
The executive team at GM should have been forced to file bankruptcy. GM would have been able to do all the things they were able to do renegotiate contracts, etc., but the executives would have taken the heat and the US taxpayer would not be on the hook for billions and billions of dollars is losses. My complaint is not with GM workers ... but with management. The argument that bankruptcy would have forced GM to lay off everyone and close plants is total nonsense. Management was more interested it seems in protecting their resumes and jobs than anything else, and now taxpayers are once again paying.
Dec 20, 2012 10:20 am
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autoficianado
the government in this case did what it was supposed to do and step in as the last resort. The dividends or interest you speak of is in the long term health of the US automobile industry. Why don't you ask for "interest or dividends" on the Bank bailout of 2008. The US government spent almost 600 Billion on Wall Street and didn't require any pay back.
Dec 19, 2012 1:43 pm
1 0
memexe
Supposing that you are running a privately held business and you are on the edge of the bankruptcy, will the government (your fellow taxpayers) step in as the last resort? The US auto industry is private (and has to be) and should be accountable as all the banks you`re speaking of. As far as I know, nothing comes free in this world. BTW, as a Canadian, I can't ask for nothing directly related to US banks bailout.
Dec 19, 2012 2:29 pm
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Wickedated
Go away troll!
Dec 20, 2012 10:05 am
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axual
Last resort? Hardly. Banks are a bit different in that their demise affects far too many people, so that is a trickier scenario to deal with. We should not bail out banks either. Failure is part of life, and if a company fails, they fail. Sorry. The government has no business stepping in to prop up businesses who demonstrably made their own mistakes.
Dec 20, 2012 5:54 pm
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memexe
And what the governments (taxpayers) get from this transaction? Only "thanks"? What`s the earning per share? I never felt like a shareholder in all this "rescue plan" as I've never been paid dividends or being asked to reinvest the benefices. I`m surely aware of all those saved jobs, but when money talks, there`s always interest!
Dec 19, 2012 1:12 pm
1 1
PAA
Are you the Government of the United States? Taxpayers money does not belong to the taxpayers once it is paid. What the Gov did was large and what GM managed was both lucky and remarkable. A good end to this story that could have shattered thousands of US homes and a major blow to the US economy.
Dec 20, 2012 3:19 am
0 0
http://content.worldcarfans.co/templates/0/18