GM tightlipped on further Treasury share sale

Thu May 2, 2013 3:40pm EDT

NEW YORK, May 2 (IFR) - General Motors management today largely skirted the issue of whether the US Treasury Department would soon sell its remaining 16.4% stake (241m shares) in the rescued automaker, but expectations remain high that a near-term sale of at least part of the stake via a block trade is likely.

Reporting sharply better-than-expected first quarter earnings today, GM played down its move last week to file an SEC registration statement outlining a potential share and warrant offering by unnamed "selling shareholders".

Nevertheless the shelf means Treasury could sell the stake as soon as this afternoon.

Responding to an analyst question on today's conference call, GM Chief Financial Officer Dan Amman described the filing as "procedural".

"We wanted to put that up, as we said in a press release concurrent with filing that shelf, that we are not aware at this time of any specific plans by any selling shareholder to execute an offering," he said. "But we want to take that mechanical step to have it ready."

GM shares rose as much as 5.4% to $31.82 after its earnings beat consensus forecasts on both the top and bottom line. The automaker also pointed to its increased market share.

The future of the stake was clarified in January when Treasury initiated a "pre-arranged trading plan" for its remaining GM stake after earlier mandating Citigroup and JP Morgan as lead managers on the sale.

Treasury is looking to fully exit the position within 12-15 months "in an orderly fashion", subject to market conditions, it said at the time.

Though Treasury has not publicly disclosed exactly how it will undertake the sale, it has said that it intends to employ "various means", possibly including a block sale and/or a dribble out program.

In December, Treasury sold 200m shares back to the automaker for US$27.50 a share or US$5.5bn, a premium to then market value of the stock.

Though GM went public at US$33 a share in 2010 in a deal led by Morgan Stanley and JP Morgan, Treasury's breakeven price is more than twice this level.

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