US Treasury wants to see a higher stock price before selling its shares in GM

Article by Christian Andrei, on September 23, 2012

Insiders said that the U.S. Treasury believes that the stock price of General Motors Co. will go up in the future, giving the government a better chance to reduce its losses in the automaker. The U.S. taxpayers provided the $50 billion bailout of GM in 2009. These people said that the government hasn’t yet come to a specific price threshold at which it would attempt to exit its remaining 500 million GM shares but the Treasury is closely monitoring the value of its stake.

Analysts think that one major factor that may boost GM shares in early 2013 is the planned release of very profitable large trucks. The Treasury thinks that with an expected increase in share price, the Treasury does not believe that it is wise to unload a large volume of shares prematurely at the present levels.

Since there are 500 million shares, a $1 increase in the share price could trim $500 million from the expected loss. GM had also thought that the U.S. automaker will buy back a portion of the Treasury's stake straight from the government. However, the government threw out this idea last year. Sources said that there are no recent high-level conversations with GM about the issue.

Last Friday, the Treasury Department released records of Geithner's meetings. It was found out that Treasury Secretary Timothy Geithner was in a meeting or talked with GM CEO Dan Akerson three times over five days in early March. The U.S. Treasury hasn’t made a comment yet. But in the past, government officials have said that they are aiming to sell the GM stake as soon as practicable while also optimizing the value for taxpayers.

Topics: us treasury, gm, shares

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