The figure is in: The U.S. government will have to sell its shares in GM for $133.78 each in order to recoup the $50 billion it doled out bailing out the Detroit automaker, according to watchdog group of bailout funds. Neil Barofsky, the special inspector general for the bailout of the financial and auto industries revealed that number in a letter to Sen. Chuck Grassley of Iowa. The government plans to start the divestment process when GM issues its IPO in November, right after the interim elections.
The $133.78 figure does not cover legal and investment banking fees for the IPO, nor does it include the government”s preferred shares. To reach that number, the shares will have to sell for $40 above its peak stock price of $93, which it was at back in April of 2000. GM made $4.45 billion in profit that year.
GM will not be issuing common shares in the IPO, but instead will only offer preferred shares, and use that capital to reinvest in the company. So far GM has paid the government $6.7 billion in loan repayment, and $719 million in dividends on the preferred shares.
– By: Stephen Calogera