GM Share Sale Leaves U.S. Room to Exit Automaker in 2013

The U.S. Treasury Department has reduced its stake in General Motors Co. to 7.3 percent as part of a program to sell all of its shares as soon as this year.

The Treasury’s stake is down from 32 percent in December when the government announced it was selling $5.5 billion of its stock back to GM and planning to sell the rest on the market within 15 months. The U.S. said last week in a report it had recovered $35.4 billion of $51 billion invested in GM. With the remaining stake worth about $3.8 billion, the U.S. would probably lose about $11.8 billion.

“We remain on track to complete our exit from GM by early next year at a cost far less than originally projected,” Tim Massad, the department’s assistant secretary for financial stability, said in an e-mail today. The sales could be completed as soon as this year, the automaker’s top executive has said. The U.S. held a majority of GM’s stock when the Detroit-based automaker emerged from a government-backed bankruptcy in 2009.

The government is exiting GM as investor confidence has risen while the company introduces 18 new or redesigned vehicles in the U.S., transforming its lineup into one of the freshest in the industry from the one of the oldest. GM gained 2.4 percent to $37.58 at the close in New York. The restructured company held its initial public offering in 2010 was $33 a share.

GM, armed with some of its best vehicles in a generation, has benefited as U.S. industry sales of new cars and light trucks totaled 1.5 million in August, the most in one month since May 2007. The seasonally adjusted annualized selling pace exceeded 16 million for the first time since October 2007, signaling robust demand.

Light-vehicle sales in the U.S., where GM is the market leader, will probably rise to 16.1 million next year, the average estimate of 13 analysts surveyed by Bloomberg.

Obama Centerpiece

The U.S. investment in GM was the biggest piece of an industry bailout that became a centerpiece of President Barack Obama’s first term.

The government may complete selling its GM stake before the year is over, Chief Executive Officer Dan Akerson has said.

“We hope the government will have sold their shares hopefully in the next probably three to six months, maybe a little longer,” he told Bloomberg Radio in August.

Canada is also looking to exit its ownership in GM. The Canadian and Ontario governments earlier this month agreed to sell 30 million GM shares worth about $1.1 billion to Bank of America Corp. and Royal Bank of Canada in a block trade, reducing their stake by 21 percent to 110 million shares.

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