GM purchases $2.1 billion of GM stock from the federal government
When General Motors proceeded with their IPO earlier this month, part of their goal was invest a portion of the money from the public offering to purchase back the GM stock owned by the government. This recent buy-back of Preferred Stock accounts for roughly 84 million shares with a purchase price of $22.50 per share – a 2% premium over the liquidation price of this type of GM stock.
This move shows that General Motors is making strides to reduce the debt owed to the US Government and the American citizens from the bailout. A great many Americans were against the bailout, mostly because they did not feel that the automaker would be able to repay that money to the American taxpayers but with GM’s remaining brands all doing well over the past few months (as well as a very successful IPO) the company is working to silence their critics.
General Motors will present a $0.7 billion charge against net income to cover the difference between purchase price and the recorded value of the Preferred Stock purchased today from the US Treasury. The impact of these recent stock moves will be reflected in early 2011 when the company provides an update to their balance sheet.