U.S. Treasury Said to Be Reluctant to Sell Its GM Shares at Current Price
The U.S. Treasury Department is reluctant to sell part of its 33 percent stake in General Motors Co. to the company at this point because the price is too low, a person familiar with the matter said.
Executives at Detroit-based GM have discussed buying some of the Treasury’s shares or allowing all holders of common stock to sell back shares, said the person, who asked not to be identified revealing private discussions. The Treasury doesn’t want to sell GM while the shares are trading at 13 percent less than the $33 initial public offering price, the person said.
The government is also disinterested in the idea because selling shares to GM may lead to criticism that the automaker is getting a preferential deal, the person said.
The Treasury Department sold 28 percent of GM at $33 in its IPO in November. The government would like to get at least that price in a stock sale and preferably more, people familiar with the matter have said.
The government’s 500 million shares in Detroit-based GM would be valued at about $14.3 billion as of yesterday’s closing price, reported Bloomberg. GM rose 22 cents to $28.78 at 4 p.m. in New York Stock Exchange composite trading.
GM management is considering uses for the $30.6 billion in cash and marketable securities that the automaker had at the end of the first quarter.
Chief Executive Officer Dan Akerson said the company is considering all uses for its cash, including paying down debt and shoring up the company’s pension plan. The automaker said it had $30.6 billion in cash at the end of the first quarter.
Akerson declined to comment on the prospect of a share buyback.
“We’ll see,” he told reporters before today’s annual meeting.
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