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ABC reports that GM has purchased $2.1b worth of its stock from the Treasury Department, bring the government’s stake in the bailed-out automaker to 33 percent. GM’s stock price must now reach $53/share in order for the government to recoup its remaining $16.88b investment in The General. GM’s stock currently trades at around $33.70, and recent analysis from UBS shows that the company faces significant short-term challenges as an investment.
11 Comments on “GM Buys $2.1b Of Government’s Equity...”
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It’ll probably hit $53/share when BYD launches the e6 EV.
It’ll probably hit $53/share when BYD launches the e6 EV.
what is the reasoning? Isnt BYD is not going to market their own EVs?
Had Warren made the money and wanted to run now?
GM will hit $53 only if toyota get into another fine mess.
gypsies, tramps, and thieves.
Wow, $2.1 billion. Well, we have a nice $45 billion parting gift our lovely UAW-owned contestant will never have to pay back:
“Usually, companies that undergo a significant change in ownership risk having major restrictions put on their tax benefits. The U.S. bailout of GM, in which the Treasury took a 61% stake in the company, ordinarily would have resulted in GM having such limits put on its tax benefits, according to tax experts.
“But the federal government, in a little-noticed ruling last year, decided that companies that received U.S. bailout money under the Troubled Asset Relief Program won’t fall under that rule.”
http://online.wsj.com/article/SB10001424052748704462704575590642149103202.html
That is correct. “New” GM got $50 Billion in tax benefits that actually belong to “Old” GM.
So actually all the money borrowed will never get paid back. The cash from stock sales and repayment is sneaking back into GM through the back door as $50 Billion in taxes they should be paying the government, but won’t be.
Old GM still exists. So it is more than a company keeping tax breaks that are always canceled in bankruptcy. A totally new company is getting tax breaks that rightfully and legally belong to another corporation. One that even still exits.
You also saw last week that somehow no union people were actually laid off in the bankruptcy. Only white color jobs and dealers were fired. Now that the new GM has some cash they are buying out union employees. Employees that also lost ZERO of their fringe benefits and pensions in the bankruptcy. Another first in US history.
Most of those taking the buyout will be workers over 60 years old who already qualify to retire with full benefits. So while they all could retire tomorrow with full pensions and benefits, they now get an additional $60,000 bonus check. For 2000 employees, that comes to $120 million.
The “16.88b investment” is dwarfed by the approx. $45 billion in tax loss carry-forwards that the Obama administration also allowed Government Motors to retain, contrary to standard Chapter 11 law and precedent, and constitutes a massive “off the books” taxpayer bailout on top of the “investment” … one which the government will by definition never even seek to collect. So the taxpayers have been, and will always remain, massively screwed by Obama, the corporation GM and (the biggest beneficiary) the UAW.
Let’s help our gentle readers get a better handle on said gypsies, tramps and thieves:
“Democrats seem impervious to embarrassment as they buy votes for ObamaCare, but their latest move makes even Nebraska’s Ben Nelson look cheap: The 87% of Americans who don’t belong to a union will now foot the bill for a $60 billion giveaway to those who do.
“The Senate bill was financed in part by a 40% excise tax on high-cost insurance coverage. The White House backs this “Cadillac tax” as one of the few remaining cost-control tokens. But Big Labor abhors the tax because union benefits tend to be far more generous than average, and labor leaders and House Democrats have been throwing a political tantrum for weeks.
“So emerging from their backrooms, Democrats have agreed to extend a special exemption from the Cadillac tax to any health plan that is part of a collective-bargaining agreement, plus state and local workers, many of whom are unionized. Everyone else with a higher-end plan will start to be taxed in 2013, but union members will get a free pass until 2018.
“Ponder that one for a moment. Two workers who are identical in every respect—wages, job, health plan—will be treated differently by the tax system, based solely on union membership.”
http://online.wsj.com/article/SB10001424052748703657604575004992410621692.html
“The 87% of Americans who don’t belong to a union will now foot the bill for a $60 billion giveaway to those who do.”
In what universe does this even approach “Equal protection under the law”?
Remember, this is just GM. Chrysler money grab is next.
Pro – GM must believe to some degree their stock price will go up.
Con – Gov’t has to wait longer to break even.
Con – I’m getting double ended by living in Ontario Canada, my tax dollars to both governments taking longer to break even, never mind the inflation aspect.