DETROIT (Bloomberg) -- General Motors Co. executives have discussed buying shares from the U.S. Treasury Department to reduce the government’s 33 percent stake in the automaker, three people familiar with the matter said.
No decisions have been made on a share purchase plan, said the people, who didn’t want to be identified revealing internal discussions. GM is weighing uses for its cash, such as shoring up its underfunded pension plan, paying off debt and funding new vehicle programs, the people said.
“In terms of uses of cash, we have clear, immediate priorities which include further strengthening our balance sheet and fully funding our pensions,” Jim Cain, a GM spokesman, said in a telephone interview. “Our objective is to fund our operations with cash and then return any excess cash to our shareholders. Nothing has been ruled in or out.”
GM could use some of the $30.6 billion in cash and marketable securities it had at the end of the first quarter to reduce the government’s stake and relieve investors’ concerns that a share sale by the Treasury would hurt the share price, said David Whiston, an analyst with Morningstar Inc. in Chicago.
“There is an overhang on the stock because of government ownership,” Whiston said in a telephone interview. “GM may think that buying down Treasury’s stake will remove some of the overhang.”
GM on Friday fell 48 cents, or 1.6 percent, to $29.12 on the New York Stock Exchange after earlier dropping as much as 2.4 percent. The shares have declined 12 percent since their initial public offering in November.
The U.S. Treasury Department on Thursday announced an agreement with Fiat S.p.A. to sell the government’s remaining 6 percent stake in Chrysler Group LLC. The sale would bring Fiat’s stake in Chrysler to 52 percent.
