News Column

US Relinquishes Right to Inspect GM's Financials

Dec. 20, 2012

Nathan Bomey

The U.S. Treasury Department will sell 200 million shares of General Motors back to the automaker on Friday, according to details of the agreement released today.

After the transaction, which was announced Wednesday morning, the government will own 300 million shares, or about 19%, of GM. GM released the agreement today in a filing with the U.S. Securities and Exchange Commission.

One fresh detail included in the filing: The government agreed to give up its right to inspect GM's financials and property, a right the U.S. acquired as part of its $49.5-billion bailout of GM in 2009.

According to the company's previous agreement with Treasury's Troubled Asset Relief Program (TARP), government inspectors had the power to "visit and inspect any of its properties and examine and make abstracts from any of its books and records ... as often as may reasonably be desired."

Officials disclosed Wednesday that the government would no longer prevent GM from buying or leasing corporate aircraft after the $5.5 billion buyback deal. GM is also no longer subject to strict requirements dictating the percentage of vehicles that must be manufactured in the U.S., although the company was quick to point out that it will exceed those requirements in 2013 and 2014.

But a senior Treasury adviser told the Free Press that GM will still be subject to corporate pay restrictions until the government unloads all of its stock in 12 to 15 months.

GM has griped about the pay restrictions, arguing that it prevents the company from adequately competing for executive talent.

Still, investors have welcomed the government's plan to sell its stock -- and analysts said the company is positioned for a healthy 2013.

With the "'Government Motors' stigma eliminated," Barclays analyst Brian Johnson said in a research note, "GM customers (perhaps importantly for pickups) who may have been alienated by government involvement may now purchase a GM vehicle."


Distributed by MCT Information Services

For more coverage on the automotive industry, please see HispanicBusiness' Auto Channel

Source: (c) 2012 the Detroit Free Press

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters