Will General Motors Company (GM) Ever Repay Taxpayers? – Ford Motor Company (F)

Page 1 of 2

General Motors (GM)Earlier this week, the U.S. Treasury Department disclosed that it had raised $489.9 million from the sale of General Motors Company (NYSE:GM) shares in February.

The Feds didn’t disclose exactly how many shares they had sold, but given General Motors Company (NYSE:GM)’s share prices in February, it’s a considerable number – at least 17 million shares, possibly 18 million or a bit more.

Clearly, the government is serious about its plan to exit GM, announced last December. And while that seems like good news for the General, it could create some interesting complications.

Will the Feds ever recoup their “investment” in GM?
Back in December, Treasury agreed to a deal in which it would sell 200 million of its remaining 500 million shares of General Motors Company (NYSE:GM) directly to GM, in exchange for $5.5 billion – and would sell its remaining shares gradually, on the open market, over the following 15 months or so.

That deal left the Feds with 300 million shares. Those shares are the last major legacy of General Motors Company (NYSE:GM)’s controversial 2009 “bailout”, in which the government took a stake in GM in exchange for financing the battered auto giant’s high-speed restructuring via bankruptcy.

The financing provided by the Treasury for GM’s restructuring – its “investment” in GM, as it has been termed on occasion – totaled some $49.5 billion. Of that, GM has now “repaid” – directly or indirectly – a bit less than $30 billion:

$6.7 billion in cash, the last of which was paid in April of 2010 (when then-CEO Ed Whitacre declared that GM’s debt had been “paid in full”)

$13 billion via GM’s IPO, when the government sold about 45% of its stock holdings

$2.1 billion when General Motors Company (NYSE:GM) bought back some preferred stock from the Treasury in late 2010

$5.5 billion when GM bought back those 200 million shares from the Treasury in December of 2012

$646.3 million in sales of GM stock by the Treasury in January and February of 2013

The remainder in interest and dividends on loans and preferred stock.

That leaves the Treasury short about $20 billion – and with something like 277 million shares left to sell. The math on that doesn’t work out well for taxpayers: The Feds need to get something like $72 a share in order to break even on their “investment”.

GM is trading at a bit over $28 as I write this on Thursday. Clearly, the Feds aren’t likely to recoup their money any time soon – at least, not by selling their remaining GM stock.

How is that going to work out for GM?

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!