U.S. plans to exit GM stake by year-end, may lose $10 billion

Thu Nov 21, 2013 8:06pm EST
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By Paul Lienert

DETROIT (Reuters) - The U.S. government said on Thursday it expected to sell its remaining shares of General Motors Co (GM.N: Quote) by the end of the year, a plan that may leave taxpayers saddled with a total shortfall of about $10 billion on the automaker's 2009 bailout.

The Treasury Department's intention to sell the last remnant of its GM stake highlights a remarkable recovery staged by the U.S. auto industry since the nearly $50 billion taxpayer-funded rescue of the largest of the Detroit 3 automakers.

U.S. auto sales through October have risen 8.4 percent, with sales expected to top 15.5 million for the full year - well above the recessionary trough of 10.4 million in 2009.

"Our goal was never to make a profit," said a Treasury official who requested anonymity. "It was to save the U.S. auto industry."

Even so, Washington's move also calls attention to how much the unprecedented bailout, implemented under the government's Troubled Asset Relief Program (TARP), has cost taxpayers.

As of Thursday, the government said it had completed the sale of 70.2 million shares of GM stock, and to date had recouped $38.4 billion of the $49.5 billion investment.

At current prices, Treasury would recoup another $1.2 billion from its remaining stake of 31.1 million shares, bringing its total recovery to $39.6 billion. Treasury said its initial cost basis for the GM shares was $43.52 a share, compared with a closing price of $38.12 on Thursday.

While saying the final GM share sale would take place by year-end, Treasury has given itself some leeway. Any sale, it said, was subject to market conditions and if average daily trading volumes remained at recent levels.   Continued...

The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August 25, 2009. REUTERS/Jeff Kowalsky/Files