General Motors headquarters. Photo Credit: General Motors
The U.S. Treasury continues to wind down its ownership in the largest U.S. automaker, General Motors (GM 4.37%). It's sold chunks of its shares off and dwindled its ownership from 60.8% down to 7.3% currently.
According to a report [link opens in PDF] today from the Office of the Special Inspector General for the Troubled Asset Relief Program, "In return for a total of $49.5 billion in loans to GM, Treasury received $6.7 billion in debt in GM (which was subsequently repaid), in addition to $2.1 billion in preferred stock and a 61% common equity stake." Treasury has divested its preferred stock and most of its common stock. "Because the common stock sales have all taken place below Treasury's break-even price," the report says, "Treasury has so far booked a loss of $9.7 billion on the sales."
Treasury owned 101.3 million common shares of GM stock as of Sept. 26. In order to recoup its total investment in GM, Treasury says it would to recover an additional $15 billion in proceeds from future stock sales -- not taking into account dividend and interest payments -- meaning it would need the stock price for the remaining shares that it sells to reach nearly $148. GM Shares closed Friday at $35.59, up about $6.50 from the beginning of the year.
Chrysler also received federal funds to help stave off collapse. The Treasury provided roughly $12.5 billion in loans to Chrysler, of which $2.1 billion was never drawn down. Treasury's books show a $2.9 billion loss to the taxpayers for its investment in the third-largest domestic automaker.
