Today, the U.S. Department of the Treasury announced its plans to continue selling its holdings of General Motors (NYSE:GM) stock. This is its third announced trading plan, and the government currently holds 101.3 million shares of GM's stock, or approximately 7% of the shares outstanding.
In December 2012, General Motors repurchased 200 million shares from the Treasury, for a cost of $27.50 per share, or approximately $5.5 billion in total. At that time, it was announced that the U.S. intended to fully exit its stake in GM within 12 to 15 months. Upon the conclusion of that buyback, the Treasury still held 300 million shares, or roughly 19% of the shares outstanding.
In total, the U.S. Treasury invested $51 billion "to help stabilize and restructure GM," through the rescue of the U.S. automotive industry that began in 2008 under President Bush, and was expanded in 2009 by President Obama. As of last count, in August, the Treasury had recovered approximately $36 billion of that investment.
This sale represents one part of the Treasury's continued efforts to unwind the Troubled Asset Relief Program (TARP). To date, the Treasury has recovered more money than it disbursed -- $414 billion compared to $412 billion -- for TARP investment programs, excluding housing.
Tim Massad, Treasury Assistant Secretary for Financial Stability, noted of the announced sale of GM common stock, "We are pleased with the progress to date and will continue exiting this investment in accordance with our previously announced plan and timetable, and in a manner that maximizes returns for taxpayers."
This announcement also comes three days after Moody's Investors Service upgraded General Motors from the speculative bond rating of Ba1, to investment grade Baa3. Moody's stated, "The upgrade reflects its view that GM's competitive position and credit metrics will continue to improve based on the strength of the company's new product introductions in the U.S., its solid position in the increasingly important Chinese auto market and its focus on maintaining a robust liquidity profile."
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