US: GM pays major slice of Treasury rescue funds as it moves to government exit
General Motors is to buy back US$5.5bn of the US Treasury's stake in the automaker with the remainder to be paid off within 12 to 15 months.
The US manufacturer will purchase 200m shares of GM common stock held by the Treasury for US$5.5bn, or US$27.50 per share.
The share buyback is part of the Treasury's plan, announced today (19 December) to fully exit its entire holdings of GM stock within 12 to 15 months, subject to market conditions.
Treasury disposal of its remaining shares will be as soon as January, 2013, while in addition, it has also agreed to relinquish certain governance rights included in the US Treasury Secured Credit Agreement with GM.
"This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers and it demonstrates confidence in GM's progress and our future," said GM chairman and CEO, Dan Akerson.
"A fortress balance sheet has been a pillar of GM's financial strategy and has enabled us to undertake today's actions," said GM senior vice president and CFO, Dan Ammann.
"GM's balance sheet will remain very strong, with estimated liquidity of approximately US$38bn at the end of 2012, following the closing of the share buyback."
After the repurchase, the Treasury will continue to own around 300m shares of GM common stock, or 19% of the outstanding shares on a fully diluted basis.
Government ownership of GM stock was the result of the auto industry rescue started by President George W. Bush in 2008 and which was expanded by President Barack Obama in 2009.
"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," said Akerson.