(RTTNews) - Automaker General Motors Co. (GM: News ,GMM.TO: News ) said Wednesday that it has completed the repurchase of all GM preferred stock issued to the U.S. Department of Treasury under a federal government bailout, repaying taxpayers $2.1 billion. The Treasury had invested $49.5 billion in taxpayer money into the once-struggling GM under the federal government's bailout program, called the Troubled Asset Relief Program or TARP. GM emerged from bankruptcy on July 10, 2009. In November 2010, the company came back to the market with its public offer and raised $23.1 billion, making it the second largest offering in U.S. history.
GM said it completed the purchase of 83.89 million shares of 9% Series A preferred stock held by the Treasury at $25.50 per share, representing a 2% premium over the liquidation value. The Treasury had said in October that it accepted an offer by GM to repurchase $2.1 billion of preferred stock. The transaction for the preferred stock repurchase was expected to occur in mid-December 2010.
GM said it plans to record a charge of about $0.7 billion to net income attributable to stockholders for the difference between the purchase price and the recorded value of the preferred stock under fresh-start accounting.
Further, GM said it will provide an update of its balance sheet, including current assets, liabilities, pension funding status and post-IPO ownership structure when it files its 2010 Form 10-K in early 2011.
Separately, the Treasury noted that following the preferred stock repurchase by GM, taxpayers have received a total of $23.1 billion from the company through repayments, interest, and dividends since the automaker emerged from bankruptcy in July 2009. Following GM's IPO and the preferred stock repurchase, the Treasury's remaining stake in the automaker now consists of 500.07 million shares of common stock.
Tim Massad, Acting Assistant Secretary for Financial Stability, said, "Temporary support through TARP to General Motors during the financial crisis was essential to preventing a devastating collapse of the American auto industry and saving more than 1 million American jobs. The fact that the auto industry has created tens of thousands of jobs since GM emerged from bankruptcy and that Ford,GM: News , and Chrysler are all operating at a profit for the first time in six years is further evidence that the decision to provide support was the right one."
The Treasury noted that to date, it has made disbursements of $389 billion under its TARP authorization. With Wednesday's preferred share repurchase, TARP repayments and income from dividends, interest, and the sale of other securities now total $266.5 billion.
