December 3, 2023

DealBook: G.M. Stock Sale Likely to Be Later Than Expected

Already facing diminished expectations for a stock offering of the American International Group, Treasury Department officials are planning a secondary sale of General Motors shares for late summer or early fall — later than many investors expected.

In November, G.M. raised more than $20 billion selling common and preferred stock, a public offering that reduced the government’s stake in the automaker to a minority position.

At the time, the Treasury Department said it planned to sell off its remaining shares through another sale but provided no specific timetable. Many investors thought the next offering would take place shortly after the lock-up period ends, which is in late May.

Treasury officials plan to wait until at least mid-August or September, according to people with direct knowledge of the matter who were not authorized to talk publicly.

“It’s entirely up to them what they do with their shares,” said James Cain, a spokesman for General Motors. “We continue to be focused on profitability around the world and further strengthening our balance sheet.”

Shares of G.M. have taken a hit in recent months. After surging to nearly $40, the stock has dropped to around $31, below its market debut in November. The company’s initial public offering was priced at $33.

With a later stock offering, G.M. will have an additional quarter of earnings under its belt. Investors will also have a better sense of the impact of the Japanese earthquake disaster on the supply chain. All that could help lift the stock and the value of the government’s stake.

Despite the potential for improved proceeds, the government is unlikely to turn a profit on its $49.5 billion bailout of the troubled automaker, fashioned in late 2008 and early 2009. Treasury officials are currently projecting a $10.8 billion loss from investments in G.M.

“We’re going to lose money in the auto industry,” though less than originally expected, Treasury Secretary Timothy F. Geithner told the Detroit Economic Club last month. But, he added, “We didn’t do these things to maximize return. We did them to save jobs. The biggest impact of these programs was in the millions of jobs saved.”

If the Treasury is able to sell off its remaining stake later this year, it would be a major political victory for the Obama administration. Many analysts had projected that the government would be entangled with G.M. for years.

The people said the timing of the G.M. offering is not linked to the troubles with the stock sale of A.I.G.

At one point, the government had hoped to raise as much as $20 billion with a public offering of the insurer, of which taxpayers own 92 percent. But shares of the insurer have struggled. After hitting nearly $63 in January, A.I.G. stock is now trading around $30.65.

Based on the recent price, the A.I.G. offering would be closer to $9 billion. Treasury officials have said that taxpayers will break even on their investment provided A.I.G. can sell its shares for at least $28.72.

Evelyn M. Rusli and Nick Bunkley contributed reporting.

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