WASHINGTON (Reuters) - The U.S. Treasury said on Thursday it was selling 30 million shares of General Motors Co (GM.N) at $34.41 each, raising roughly $1.03 billion as part of its ongoing effort to exit from the bailed-out company and reduce losses to taxpayers.
The public offering, which coincided with GM’s re-entry to the Standard & Poor’s 500 index, will take the amount recouped for U.S. taxpayers so far to $32.53 billion. That represents a $16.97 billion shortfall from the original $49.5 billion bailout price tag. GM shares closed on Thursday at $34.44.
Treasury officials have said the goal was not to turn a profit but to save U.S. jobs. GM’s rescue, as the nation struggled to survive a severe recession, helped keep the U.S. auto industry alive. The costs of it going under would have been much higher, official argue.
With the sale, Treasury will still hold 189.2 million shares. It has said that it plans to completely exit the holding by April 2014. It would have to sell the shares at an average price of $89.69 each to spare taxpayers from any loss.
The offering was taking place along with the sale of 20 million shares of GM stock held by the UAW Retiree Medical Benefits Trust. The Treasury said that at the $34.41 price per share, the UAW could expect to recoup $688 million.
The exit of Treasury will eliminate the stigma of government ownership - some critics dubbed the company “Government Motors” - that GM executives said has hurt sales.
In addition, GM’s return to the S&P 500 is expected to prompt stronger demand for its stock. Companies often benefit from a bump up in stock price when added to the S&P, in part because some funds that track the index need to hold the stock.
Reporting by Alister Bull; Editing by Dan Grebler and Carol Bishopric