It was reported that General Motors Co. was talking with Chinese government –owned SAIC about buying a stake in the Detroit company. However, both the Treasury Department and the automaker did not give any comments on the report.
The Treasury Department who gave GM $ 50 billion loan to help the automaker through bankruptcy protection a year earlier could mull over foreign investors for GM. GM has repaid $ 6.7 billion of the bailout money. The government would hold 61 percent of stake (equivalent to $ 43 billion) in the company. The government expects to get the remaining bailout money back with stock sales.
General Motors filed for bankruptcy protection on June 1, going down American history as the third largest company to file for bankruptcy and the largest bankruptcy for the manufacturing sector.
Single investors will have more opportunity to buy GM shares while group of investors will be sought out. Both are offered opportunity to hold GM shares. The government will assure that general guidelines are followed in the sale.
Last week, new GM CEO Daniel Akerson (formerly a telecommunications industry executive) said that it is some years that the government will get its money back. GM expects to pay its debt to government and raise money for investment.
GM earned $ 2.2 billion for the first six months of 2010.
The earnings are a prospective sign to investors. It will keep shares of common stock to its three other shareholders and the government. It will sell preferred stock which will be converted to common shares in 2013.
Prior to November congressional elections, the Obama administration has been in progress of convincing voters that the money bailout for GM and Chrysler spared the auto industry an even more wrenching downturn.
Chrysler filed for Chapter 11 reorganization in April 2009. It announced partnership with Italian automaker Fiat which then held a 20% stake in the “New Chrysler” and could increase higher stake up to 35% and even 51% if Fiat met financial and developmental goals for the company.
Economics is the study of our lives,our jobs, our homes, our families and the little decisions we face every day. Thus, I am keen on reading and studying economic issues.