Filed under: Government/Legal, GM, Earnings/Financials
Special Inspector General Christy Romero has delivered another report to Congress on the state of the Troubled Asset Relief Program (TARP) up to June 6 of this year, assessing numbers to the US Treasury’s remaining stake in General Motors. After stock sales in February and another a few months later, the Fed is still the owner of 14 percent of GM, totaling 189 million shares, and is $18.1 billion in the hole after the $49.5 billion loan to the automaker. Although the share price has risen more than 20 percent this year to $37.08 at the time of writing, Romero’s latest calculations indicate it would need to climb to $95.51 for the government to be made whole. In May of this year that number was $70 per share.
GM stock is on the rise, but no one expects it to reach that number before the government’s self-imposed deadline for being divested of the stock. If sold right now, Treasury would make about $7 billion and wash its hands of the rest. Analysts expect GM’s stock to continue rising so that $7 billion number should also climb and the loss get trimmed, but even with another 25-percent gain between now and April, when the government is expected to be fully divested, that would only get it to $46 per share.
GM will be looking forward to next April, probably no matter where its stock price is, if for no other reason than to have ammunition removed from the “Government Motors” grousers. For now, it can point to the Center of Automotive Research study that declared everyone’s already been paid back plus interest, because “the cost of doing nothing was not zero.”
Treasury needs GM stock to be worth $95.51 to break even originally appeared on Autoblog on Fri, 26 Jul 2013 11:33:00 EST. Please see our terms for use of feeds.
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According to The Detroit News, the United States Treasury Department is planning on quickly eliminating its shares of General Motors stock rather than trying to maximize the government’s return on its investment. The news comes from Austan Goolsbee, chairman of the Council of Economic Advisors, who said that the government is interested in quickly shedding its 33 percent stake in the automaker due to the fact that it never wanted to be a shareholder in the automaker to begin with. The Detroit News reports that if the Treasury Department decided to sell its stake in GM at its current trading price, the government would lose something on the order of $10 billion.