General Motors Co. executives want the Treasury Department to sell its almost 27 percent stake in the company because, they say, the feds are hurting their image and government pay restrictions are chasing away top talent.
But Treasury officials aren’t interested in selling because it would mean posting a multibillion dollar loss during an election year, the Wall Street Journal reports.
GM officials offered to repurchase 200 million of the 500 million shares the feds hold with “the balance being sold via a public offering,” MarketWatch notes.
Government officials weren’t interested in the deal.
“At GM’s Friday share price of $24.14, the U.S. would lose about $15 billion on the GM bailout if it sold its entire stake,” the Journal notes. “While GM stock would need to reach $53 a share for the U.S. to break even, Treasury officials would consider selling at a price in the $30s.”
But look at it from Treasury’s point of view: What would it look like if they agreed to the deal and posted a multibillion dollar loss while the president was going around repeating the “Osama‘s dead and GM’s alive” mantra?
“GM shares have been trading well below the $33 initial public offering price of 2010, when the government sold a major chunk of its stake in the auto maker. Many on Wall Street thought GM shares could top $50 within a year, but few expect the stock to reach that level in the near future now,” the Journal notes.
Still, despite the decline in share price and Treasury’s refusal to sell, GM officials say they’re determined to break away from the feds. They claim the “Government Motors” reputation is killing them.
“Some GM officials acknowledge the uphill battle in persuading the government to sell,” the Journal adds. “But they have no plans to abandon the effort.”