General Motors Co (GM) will possibly be the largest initial public offering in the world, but at Thursday’s share price, US taxpayers are still at a 9 billion dollars loss from the government bailout.
From the end of 2008 though 2009, the US Treasury gave GM a loans worth 49.86 billion dollars. The funds were dedicated to restructuring the company and leaving the bankruptcy risk behind.
Before the IPO, the company had repaid 9.74 billion dollars to the government, counting for unused loans, dividends and interest, as well as the acquisition of Treasury preferred shares. After GM had paid that amount, US taxpayers were still 40.1 billion dollars short.
By selling 412.3 million common shares, including overallotments, the US Treasury would recover some 13.6 billion dollars. Still, even in such a context, taxpayers are left with a 26.5 billion dollars hole. In order to repay the US taxpayers, the Treasury would have to sell the rest of its stake in GM, of 500.1 million common shares at a price of at least 53 dollars per share.
However, on Thursday the Treasury was trading GM shares at 34.50 dollars per share on the New York Stock Exchange, which means that they were traded at a deficit of 18.50 dollars per share for the US taxpayers. The deficit would amount to 9.25 billion dollars.
Before the IPO, the US Treasury owned the majority stake in the company, following the almost 50 billion dollars bailout. Because of the Treasury participation in the company, investments in GM from overseas companies were a sensitive subject. The Treasury went to great lengths to make sure that did not happen. One such measure was a September-guidance that investors for the public offering of GM shares should be sought primarily in North America, including US retail buyers. In the final evaluation, some 20 percent of the listing – amounting to more than 3 billion dollars, would go to individual investors.
