General Motors Co said on Wednesday it will buy back 200 million of its shares from the U.S. Treasury, which intends to sell the rest of its stake in the company over the next 15 months, bringing to an end ownership that led many to dub the automaker "Government Motors."
Chief Financial Officer Dan Ammann said GM will pay $5.5 billion, or $27.50 a share for the Treasury stake in a deal expected to close by year end. Treasury said it will sell its remaining stake of about 300.1 million shares "through various means in an orderly fashion" over the next 12 to 15 months.
Treasury said it intends to begin its disposition of its remaining shares as soon as January.
GM received about $50 billion from the U.S. Treasury as part of its 2009 bankruptcy restructuring in 2009 under the Troubled Asset Relief Program. The government bailed out GM and Chrysler Group in a move to protect jobs, a number it put at more than 1 million.
"TARP was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time," Assistant Secretary for Financial Stability Timothy Massad said in a statement. "Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests."
GM Chief Financial Officer said the move and resulting Treasury plans will remove an "overhang" on the stock that has hurt sales and bring an "element of closure" to the bailout.
GM shares rose about 7 percent in premarket dealings.
(This story corrects Treasury official Timothy Massad's name in 5th paragraph)
(Reporting By Ben Klayman; Editing by Gerald E. McCormick)