The Federal Government wants out of the GM deal

As part of the controversial “bailout”, the US Federal Government ended up owning a large portion of General Motors which, though the IPO translated into a great many shares of stock but according to The Detroit News, the feds might try to sell off their portion of the automaker even if that means taking a loss.

The government currently holds roughly 33% of General Motors available stock and since the intention of the feds was never to end up owning a (massive) piece of the automaker, the Treasury Department might look to sell the stock very soon. This might seem like great news – especially to those who don’t think that the government should have any involvement in the company – but it comes with a catch. If the government was to sell all of its stock in GM at the current market price, the funds raise from the sale would effectively account for a loss of around $10 billion compared to the amount “owned” to the government.

The government original lent General Motors around $49.5 billion to keep the troubled automaker afloat but since then, the feds have already recuperated $23.1 billion. In order to make up the additional $26.4 billion from the bailout loans, the government would have to sell all of their stock in GM at a price of $53 per share. Unfortunately, GM stock closed today at $33.25 and should they liquidate their stock at that price, it would leave them around $9.9 billion shy of reaching the total amount of the original loan.

Pages

Share on Facebook submit to reddit Share on Google+
Sign-up to our email newsletter for daily perspectives on car design, trends, events and news, not found elsewhere.