The GM IPO
Yep, it’s a good sign that we are finally getting some of the money they should never have gotten back, but there’s a long way to go before we’re anywhere close to breaking even. The AP has a list of the numbers
Original bailout: $50 billion.
GM repaid loan portion, $6.7 billion.
GM to buy back government preferred shares: $2.1 billion.
GM repayment of government interest and dividends: $700 million.
Total repayment before IPO: $9.5 billion.
What GM still owes before IPO: $40 billion.
Government likely to make $13.6 billion in IPO by selling 412 million of its 912 million common shares at $33 each. This assumes bankers exercise options for more shares.
What GM owes after IPO: $26.4 billion.
To get $26.4 billion, government’s remaining shares must sell for $53 per share, $20 more than the IPO price.
The big problem with this is that the amount GM will still owe is not $26.4 billion but rather at least $33.1 billion because their much ballyhooed “repayment” of $6.7 billion was in fact a lie
…But lawmakers, and even the inspector general for the bailout fund GM borrowed from, point out that General Motors only repaid the bailout money by dipping into a separate pot of bailout money. They say the company did not actually use its own earnings to make the early payment…
…General Motors admits that the company is repaying the loan with other government money, but says a year ago “nobody thought we’d be able to pay this back.”
This is how our government “works”.
Biz, Morality, Nanny State, Politics | Mr. Bingley | 
November 18, 2010 6:52 am
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GM is claiming profits for the first time in years, hence the rising IPO price. Expect the stock to collapse when the feds dump their shares.
Even if they raise every penny… we’re not “making our money back.” The initial billions came out of our pockets to begin with. To take another hunk of cash out of our right pocket to stuff it back into our left – minus the vig, of course – is hardly a bargain.
I hope they don’t sell a single share and go belly-up. Why toss good money after bad?
h8r!
And keep in mind, one of the reasons they have returned to “profitability” is that they have been excused from paying taxes for a while…