News - General Motors
GM buys back $5.5 billion in shares
‘Government Motors’ to buy back more of US treasury’s slice of ‘New GM’
20 Dec 2012
THE United States government exit from General Motors continues with an announcement by America’s biggest car company that it intends to buy back 200 million of the remaining 500 million shares still held by the US treasury since the 2009 bail out of the bankrupt car-maker.
The $US5.5 billion ($A5.24 billion) deal at $US27.50 ($A6.24) a share represents a tidy 7.9 per cent premium on the current GM share price, and brings the government one step closer to its plan of divulging itself of all GM ownership within 12 to 15 months.
The buy back is expected to be wrapped up by the end of the year, with the treasury planning to start the sale of its remaining GM stock holdings “in an orderly fashion” from as early as next month.
GM chairman and CEO Dan Akerson said the buy back was an important step in bringing closure to the successful auto rescue.
“It further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” he said.
GM says it can well afford the deal, with chief financial officer Dan Ammann saying the company would still have $US38 billion in liquid cash after paying $5.5 billion for the shares.
The US government tipped in $49.5 billion into GM in loans and equity to save the company at the height of the global financial crisis, taking a 60.8 per cent share in the process.
The latest buy back will reduce the government’s shareholding to 19 per cent.
“We come to work every day grateful that taxpayers from the US and Canada stepped forward to rescue our industry, and determined to show this extraordinary help was worth it,” Mr Akerson said.
However, Autonews reports that GM is facing a few problems on the home front with growing inventories of Chevrolet Malibu and Cruze stocks, forcing production cuts to balance stock with demand.
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