U.S. Treasury resists GM plan to sell government stake
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WASHINGTON (Reuters) -- The U.S. Treasury Department is unwilling to sell the government's stake in General Motors because a sale now would mean huge investment losses, The Wall Street Journal reported today, citing people close to the matter.
Earlier this year GM floated a plan with Treasury officials to repurchase 200 million of the roughly 500 million shares the United States holds in the carmaker, the newspaper said, citing unidentified people familiar with the situation.
Under that plan, Treasury would sell the remaining shares through a public stock offering, the Journal said.
But the Treasury, which holds a 26.5 percent stake in the automaker, is not interested in GM's offer at the current price, and is not rushing to sell shares, the Journal said, citing people familiar with the matter.
At GM's Friday share price of $24.14, the United States would lose about $15 billion on the GM bailout if it sold its entire stake, the paper said.
While GM stock would need to reach $53 a share for the U.S. government to break even, Treasury officials would consider selling at a price in the $30s, the Journal said.
"The Treasury will make its own decisions about their stake in the company like any other owner," a GM spokesman told the newspaper. "Our job is to produce great cars and solid profits."
The Treasury has invested more than $50 billion in GM via the Troubled Asset Relief Program.
Neither General Motors nor the Treasury department could not
be reached for comments immediately.
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