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Old 12-19-2012, 10:36 AM   #1
banyan
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News General Motors Creates Plan To Be Government-Free Within 15 Months

By TOM KRISHER 12/19/12 08:23 AM ET EST

DETROIT -- General Motors, trying to clear the stigma of being partly owned by the U.S. government, will spend $5.5 billion to buy back 200 million shares of its stock from the treasury.

The government, in turn, promised to sell its remaining 300 million shares on the open market starting in January, and get out of the company's business within the next 12 to 15 months.

GM said Wednesday that it will pay $27.50 each for the 200 million shares, and it expects to close the deal by the end of the year. GM stock closed Tuesday at $25.49, and it shot up 7.1 percent in premarket trading Wednesday to $27.30.

"This is fundamentally good for the business," GM Chief Financial Officer Dan Ammann told reporters at a hastily called news conference Wednesday morning. He added that GM has market research showing that the government ownership has held down sales of the company's cars and trucks.

The government got its shares of the company as part of a $49.5 billion bailout of GM that began nearly four years ago, a bailout that saved GM from collapsing into financial ruin.

The move leaves the government with 300 million shares, which it pledged to sell "in an orderly fashion" within the next 12-15 months, subject to market conditions.

GM's purchase of the 200 million shares still leaves the government about $21 billion short of breaking even on its investment. To break even, the government would have to get nearly $70 each for its shares.


http://www.huffingtonpost.com/2012/1...n_2329279.html
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Old 12-19-2012, 10:51 AM   #2
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Buy at 70 and sell at 27.50 -21B, the Fed should print that by the end of the week
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Old 12-19-2012, 12:13 PM   #3
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I wish all my debt holders would allow me to short them 60% of what I owed them without any penalty..
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Old 12-19-2012, 09:34 PM   #4
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Just keep the PP to the PP thread and out of here.


I'll just say this is ****ing bull****.
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Old 12-20-2012, 07:48 AM   #5
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I also think this is sort of bull.

I will say that it is an impossible situation though. No matter what decision is reached it will anger people.

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Buy at 70 and sell at 27.50 -21B, the Fed should print that by the end of the week
You are misunderstanding what is going on.

They did not buy at 70, they would have to sell remaining shares at 70 to break even since they have already sold at 30 and 28. That implies they effectively bought somewhere in the 40 range. If you do the math it works out to $44 or so.

Last edited by sxotty; 12-20-2012 at 07:53 AM.
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Old 12-20-2012, 03:16 PM   #6
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Originally Posted by sxotty View Post
I also think this is sort of bull.

I will say that it is an impossible situation though. No matter what decision is reached it will anger people.


You are misunderstanding what is going on.

They did not buy at 70, they would have to sell remaining shares at 70 to break even since they have already sold at 30 and 28. That implies they effectively bought somewhere in the 40 range. If you do the math it works out to $44 or so.
I believe their (our) weighted-avg cost is 54 (from memory) and didn't check the math from this article. Given the previous sales and this one, I believe the important number is now up to -40B on the trade...
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Old 12-20-2012, 09:04 PM   #7
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This article says the weighted average was $44, if it would require the rest to sell at 70 to break even. Admittedly the article could be incorrect, but in either case it is misleading to say they bought at 70 and sold at 28 especially when you are suggesting you knew at the time you posted that was incorrect.
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Old 12-20-2012, 11:44 PM   #8
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I don't think the Government wins this in any way - Iceland did it the right way, the US did it the wrong way, but now they live with the decision. Either they sit on the shares of GM for a much longer time and shoulder all of the risks of dealing with Union strikes, Pension deficits, etc. while GM digs their way out of a big hole, or they get out now, call it a wash and move on. At the very least you can say they propped up GM a bit longer than normal and you can bet a large percentage of all the money GM has goes towards pension payouts in one way or another...

For cars, maybe this erases some stigma around "Government" Motors and they can start building stuff that makes sense.
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Old 12-21-2012, 12:08 AM   #9
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Quote:
Originally Posted by sxotty View Post
This article says the weighted average was $44, if it would require the rest to sell at 70 to break even. Admittedly the article could be incorrect, but in either case it is misleading to say they bought at 70 and sold at 28 especially when you are suggesting you knew at the time you posted that was incorrect.
500 shares. Sell 200 @ 27.5 = 5.5. 300.1 left @ 70 (taking article as correct) = 21. 21+5.5=26.5. 26.5/500=53 per share? Don't know why I remember 54.
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Old 12-21-2012, 01:32 PM   #10
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For cars, maybe this erases some stigma around "Government" Motors and they can start building stuff that makes sense.
Nope,

That name is going to stick for an entire generation, they're ****ed. After bankruptcy the "GM" name and logo should have died. They would have came out much better as "Chevrolet" "Cadillac" etc.... sharing techology.
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Old 12-21-2012, 08:44 PM   #11
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Quote:
Originally Posted by E. Nick View Post
500 shares. Sell 200 @ 27.5 = 5.5. 300.1 left @ 70 (taking article as correct) = 21. 21+5.5=26.5. 26.5/500=53 per share? Don't know why I remember 54.
You missed the first 412 shares that were sold awhile back. That is in the article as well in a different spot. I almost missed it when I read it as well. That will shift you to what I said.

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Originally Posted by Article
The government sold 412 million shares in the 2010 initial public offering. The shares rose shortly after the IPO, but then slid as the U.S. economic recovery faltered and Europe's economy took a turn for the worse. As the shares fell, the government balked at further sales.
So calculate it again
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