Quad Extreme Racer

Още игри

US: GM, government not discussing share sell-off plan

Admin20.09.2012г 

The U.S. government will eventually liquidate its ownership stake in General Motors, but the automaker has not proposed an official plan for the Treasury Department to sell off its shares, a source familiar with the discussions said.

The Wall Street Journal reported today that the Treasury Department rejected GM's request earlier this year to offload its remaining stake with a combination of a public offering and a GM share buyback plan. The government still owns about 32% of GM's common stock, but its stake would fall to 26% if all outstanding warrants were exercised.

GM and the Treasury Department are in regular discussions about the company's progress, but the source said the automaker has not spelled out a proposal for the government to sell its 500.1 million shares.

If the government sold its remaining shares at today's price of about $24, taxpayers would lose more than $15 billion on the $49.5 billion GM bailout. The Treasury Department wants the stock price to creep higher to reduce its losses.

GM shares have risen more than 25% since a low-close of $18.80 on July 25, but they're still down more than 27% from the initial public offering price of $33 in November 2010.

The Treasury Department's decision to hold its remaining GM shares have become a political issue because Republican presidential candidate Mitt Romney has said he would immediately sell the government's stake upon taking office. President Barack Obama's administration has said it's not meddling in GM's affairs but wants to get more cash for taxpayers.

Analysts say the government could cause GM's stock price to decline if it sells all its shares abruptly.

"Dumping the shares would never make sense," Assistant Secretary for Financial Stability Timothy Massad said on CNBC last week. "We've been very disciplined and always looking at how can we exit quickly, because the government is not a hedge fund, and it shouldn't be a long-term investor, and it shouldn't hold stakes in private companies. But we also have to maximize taxpayer returns."

GM has said it's focused on driving profitability for the business, which is posting strong profits in North America to offset losses in Europe.

"It's Treasury's decision on when and how much to sell," GM spokesman Greg Martin said. "We're busy building cars and making sure our business progress continues."

Jefferies analyst Peter Nesvold said it's highly unlikely that the government will offload its GM shares before the presidential election on Nov. 6. The government is in the "tricky position" of weighing when to sell GM's stock when "they just feel it's undervalued."

"On the one hand they didn't go into it as an investment, they went it into it to save jobs," Nesvold said. "Is the government's primary mandate here to maximize the proceeds or is it to make sure the economy is stable? I would argue it's the latter."

Analysts want the Treasury Department to map out a plan to liquidate its stake in GM, eliminating a key factor that has discouraged some institutional investors from buying shares. But they want the wind down to take place in an orderly fashion.

If GM were to buy back shares, it would probably retire them, "which would be accretive to earnings," Nesvold said. He added that it would boost GM's ability to recruit executives. The U.S. currently caps GM executive pay, but those restrictions would end once the government sells shares.

Nesvold said long-term investors will get a boost when the Treasury sells.

"Anytime you can eliminate an overhang for a major shareholder, that's a positive," he said.