Following its decision in January this year that it will sell all the General Motors shares by early 2014, the U.S. government is close to selling them off completely soon. To do the job, the government has hired JPMorgan Securities and Citigroup Global Markets and according to reports it has recovered about $35.4 billion.
It is to be noted that the U.S. government gave $49.5 billion bailout to the Detroit automaker in 2008 as it did not have enough cash to operate. Earlier this year in June the U.S. Treasury offered a deal to sell 30 million shares of General Motors Co. to recover taxpayers another $1 billion of the bailout money with the U.S. government.
Now that the U.S. government has recovered about $35.4 billion, $14.1 billion are still to be recovered. The Treasury Department is not leaving any efforts ineffective as in its August report to Congress; the statutory body said that it had sold $811 million worth of GM common stocks to get to recover the bailout money.
The Treasury Department of the U.S. will be revealing the price per share of stock sold in July and August later some time. According to some estimates, the U.S. government would have sold roughly 23 million shares in August this year when GM stocks were selling in a range of $33.50 to $37.18.
Similarly, the U.S. government would have sold 25 million GM shares in July wherein the stocks were priced around $35.56 in average. The total value of the GM shares is expected to be around $877 million.
The Government May Not Break Even
Now that around 186 million shares are left with the U.S. government, it has a challenge to sell them at $76 each to break even which is more than double the GM shares are valued currently.
On September 16, GM shares opened at 36.47 and even reached slightly up to 36.62 and closed at 36.22+0.16 (0.44%). It is highly unlikely that the government will be able to sell the remaining share at $76 per share and that way it will still be at loss.
The government will still be short about $10 billion on its GM investment; however, some observers say that Treasury Department was clear since the beginning that bailout was for saving the auto industry and jobs rather than make a profit on the investment.