U.S. stake sale of GM to revive image

DETROIT Sun Jan 13, 2013 8:13pm EST

General Motors Corp. President of North America Mark Reuss introduces the Chevrolet 2014 Corvette vehicle during a press event in an old industrial center in advance of press preview days of the North American International Auto show in Detroit, Michigan January 13, 2013. REUTERS/Rebecca Cook

General Motors Corp. President of North America Mark Reuss introduces the Chevrolet 2014 Corvette vehicle during a press event in an old industrial center in advance of press preview days of the North American International Auto show in Detroit, Michigan January 13, 2013.

Credit: Reuters/Rebecca Cook

DETROIT (Reuters) - The sale of the U.S. Treasury's stake in General Motors and a possible credit rating upgrade of the U.S. automaker in 2013 will help distance the company from the stigma of its 2009 bankruptcy restructuring.

"We lose the stigma of 'Government Motors'," GM Treasurer James Davlin said on Sunday during a speech at a conference of automotive analysts. "People will be more focused on the things that they should, which is our underlying operations."

The U.S. Treasury outlined plans last month to sell its GM stake over the next 12 to 15 months. Last week, Chief Executive Dan Akerson said he expects GM to earn an investment-grade credit rating in 2013.

GM is already "trending toward investment grade," Davlin said. He pointed to GM's eleven-quarter streak of profits, its large financial cushion and its strong position in the world's two largest automotive markets, the United States and China.

"We want to ensure we have the liquidity to make it through the cyclicality of the industry," Davlin said, speaking to reporters and analysts a day before the Detroit auto show.

Until recently, uncertainty over when and how the U.S. Treasury would sell its 26-percent stake hurt GM's overall market value, Davlin said. But GM shares have risen nearly 20 percent since the U.S. government announced its exit strategy.

GM shares are ended at $30.36 per share on Friday.

Still GM has a number of challenges ahead, most prominently of which is Europe. GM is struggling to stem years of losses in the depressed and highly competitive European market where its core brands are Opel and UK-based Vauxhall.

It has made inroads in restructuring its European operations, including announcing plans to close its assembly plant in Bochum, Germany. But Akerson said he is not yet satisfied with GM's current position.

"That's probably my greatest concern -- how quickly can we turn that around," Davlin said, of Europe.

He also predicted that the U.S. dollar would rise against the Japanese yen and the euro this year. This would represent a "slight headwind" to GM, which must convert its earnings overseas into U.S. dollars. GM is also expecting a stable U.S. economy in 2013.

"We don't see a big rebound in the economy or a return to financial doldrums," Davlin said, of 2013.

(Reporting By Deepa Seetharaman; Editing by Diane Craft)

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Comments (4)
AlaskanDude wrote:
Okay, I’ll go back to calling you General Motors, Mr. Davlin, as soon as you make the US Taxpayer whole along with a reasonable interest. Shame on Reuters for carrying this misleading information.
The US Taxpayer lost BILLIONS in this bail out.
GM will and should remain Government Motors until they pay us back. Period.

Jan 13, 2013 9:44pm EST  --  Report as abuse
ordinaryman wrote:
GM priced its stock during the IPO at $33. It raised $20.1 billion. I was overvalued but it suited everyone involved. When US Government sells its holdings, the price is bound to fall. GM’s stock price is around $30 now. The taxpayers get nothing in the deal. GM executives and workers benefited. Obama won in Michigan but other less fortunate people of USA will lose. That is how democracy works.

Jan 13, 2013 10:18pm EST  --  Report as abuse
mrmouth wrote:
That is some strange logic. As if the bailout never happened? Anyone going out of their way to care about this is somehow going to stop after the government sells the shares?

Because I do not care. It wouldn’t stop me from buying a GM car. Call me crazy but I actually look to reviews…

Jan 13, 2013 10:58pm EST  --  Report as abuse
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