AUTO INDUSTRY NEWS

General Motors to buy back 200M shares from US Govt

General Motors to buy back 200M shares from US Govt image

Text: / Photos: | posted December 20, 2012 02:35

Back on their feet?

General Motors has come a long way since 2009. After filing for Chapter 11, securing a bailout package from the US government, reorganizing into a New GM with leaner operations and a more competitive product line up, it seems General Motors is now getting ready to buy back some of the government's shares: 200 million shares amounting up to US$ 5.5 billion.

The 200 million shares amounts to about 40% of what the US Federal Government owns of the company through the Treasury. The planned purchase would reduce the percentage of the Treasury's stake in GM from 26.5 percent to just 19 percent.

Gradually buying back the company's shares from the government is a positive step for the previously embattled automaker's image after the troubles of 2008-2009. The image of the brand was truly tarnished by the US$ 50 billion government bailout, with pundits referring to GM as “Government Motors”.

With the buyback of 200 million shares at $27.50 per, the US Government will have to sell their remaining shares at just under $70 just to break even on their $50bn bailout in 2009.