Factbox: Facts on Treasury stake in GM, sale considerations

WASHINGTON Wed Aug 18, 2010 7:21pm EDT

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WASHINGTON (Reuters) - The Treasury will sell a portion of its 60.8 percent stake in a General Motors Co public share offering, another step toward recovering some $50 billion in public bailout money and bankruptcy financing the company received in 2009.

The following is a breakdown of the U.S. government's stake in the automaker and some of the challenges faced by Treasury officials in determining when to sell, how much to sell, and at what price. A formal sale is expected later this year.

* The Treasury owns 60.8 percent of common equity in the new GM and $2.1 billion in preferred stock. GM received nearly $7 billion in direct loans and $43 billion in bailout cash and bankruptcy aid. GM used $7 billion of unspent bailout funds to repay the loan portion of its aid package in April. The Obama administration provided much of the aid, and it is unclear if the government will recoup the entire balance.

* GM received four funding installments from the government. First TARP financing: $13.4 billion; January 2009 (Bush); Second TARP financing: $2 billion; April 2009 (Obama); Third TARP financing $4 billion; May 2009 (Obama); Bankruptcy DIP financing; $30.1 billion; June 2009 (Obama)

* The Treasury is expected to sell more than 20 percent of its stake. Ron Bloom, the administration's point man on auto restructuring, said last month that GM was on an "orderly course" as a viable business and hoped for a share sale by year's end. There has been speculation the administration was pushing GM to float shares before the November election to help Obama's economic message and to aid Democrats in key states. But Bloom has said it would be irresponsible to rush the sale and has promised to "walk it" carefully and sell it gradually.

* A key number for Treasury is the $70 billion valuation mark for GM since that would allow taxpayers to break even. Achieving EBITDA (Earnings Before Interest Tax Depreciation and Amortization) of $16 billion in 2011 would value GM at just over $70 billion applying the multiple of its nearest U.S. competitor by sales, Ford Motor Co. On another measure, price-to-earnings, GM would have to earn almost $10 billion in 2011 to justify a $70 billion value if investors applied Ford's multiple to its larger rival. GM's advisers believe it could be valued at over $80 billion after accounting for its stake in Delphi and Ally Financial, formerly GMAC. Treasury has also been consulted on the question of how to balance access to the offering by retail investors against the potentially competing goal of maximizing returns for U.S. taxpayers.

* Adding pressure, Sen. Charles Grassley, the ranking Republican on the Financial Services Committee, has asked the Treasury Department special inspector general for the Troubled Asset Relief Program for an analysis of the GM IPO and how much money will be returned to taxpayers. Grassley wants to know if Treasury officials and GM are taking "adequate steps" to ensure the "highest possible return." The TARP corporate bailout fund is the source of money for the GM bailout. Grassley also wants Treasury to disclose total transaction costs that will be paid to investment bankers.

(Reporting by John Crawley, Kevin Krolicki, Soyoung Kim, Clare Baldwin)

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