DETROIT — The Treasury plans to sell its remaining stake in General Motors over the next 15 months, allowing the automaker to shed the stigma of being partly owned by the U.S. government.
GM said Wednesday it will spend $5.5 billion to buy back 200 million shares from the Treasury by the end of this year. The government, in turn, plans to sell its remaining stake of 300 million shares on the open market over the next 12 to 15 months.
GM will pay $27.50 for each share, about an 8 percent premium over Tuesday's closing price of $25.49. The shares shot up about 7 percent to $27.30 in Wednesday morning trading.
The government is almost certain to lose billions on the $49.5 billion bailout that saved GM from being auctioned off in pieces during the financial crisis in 2008 and 2009. The Treasury says it will have recouped about $28.7 billion after GM completes its buyback. So, to break even, Treasury would have to sell the remaining 300 million shares for average of about $70 each.
GM says getting the government out of its business removes a major obstacle. Chief Financial Officer Dan Ammann told reporters that the company has market research showing that government ownership has held down sales of its cars and trucks.
"This is fundamentally good for the business," he said at a hastily called news conference Wednesday morning.
Almost immediately, GM will no longer be banned from owning a corporate jet or required to manufacture a certain percentage of GM cars and trucks in the U.S. GM says it already has exceeded the manufacturing requirements and will continue to do so for the foreseeable future. It has no immediate plans to buy or lease corporate jets.
Government-ordered pay restrictions will remain in effect until the Treasury completes the sale of its remaining 19 percent stake. Treasury said in a statement that the sale will be subject to market conditions.