WASHINGTON (AP) — The Treasury Department will hold off on further sales of the stock it owns in General Motors Co. until August at the earliest, according to two people with direct knowledge of the GM situation.
These people said Thursday that Treasury will not start selling shares until after the automaker reports its second-quarter results which is expected to occur in mid-August. They said the next sale could slip until September.
These people, who had been briefed on the situation, spoke on condition of anonymity to discuss decisions which have not yet been publicly announced by the government.
They said that the government could view August, September and November as potential windows for stock sales this year. They also said sales of some of the stock could slip into 2012.
The government now owns 500 million shares of General Motors, representing a 26.5 percent stake in the company.
The government had received a 61 percent stake in GM two years ago in return for its $49.5 billion bailout of the automaker. However, Treasury sold part of its equity stake in the company in November when GM conducted an initial public offering that raised $23.1 billion.
Treasury never gave a timetable for when it would sell more shares. However, investors had speculated sales would begin once a lockup period preventing sales by major shareholders expired on May 22.
The people familiar with the situation said that Treasury does not have a timetable for sales other than that they will be conducted as soon as practical with the aim of maximizing the return to the government.
Asked for comment, GM spokeswoman Renee Rashid-Merem said, "Our role is to continue to deliver results and create shareholder value. It is up to the U.S. Treasury as to when they sell their remaining stake."
GM stock, which was sold at a price of $33 per share in the initial public offering in November, closed as high as $38.98 on Jan. 7, but has since dropped to around $31 per share. Investors have worried that the government will depress the stock price when it starts selling its shares. They've also been concerned that high gasoline prices could hurt sales of SUVs and pickups, GM's most profitable vehicles, and that rising costs will squeeze profits further.
The company is eager to convince investors of the value of its shares. Earlier Thursday, GM CEO Dan Akerson invested $940,000 of his own money to buy 30,000 GM shares. Akerson's holdings are now worth $1.6 million.
GM reported a first-quarter profit of $3.2 billion last week, its highest quarterly profit in more than a decade. Its shares fell, however, as investors noted that it spent heavily on sales incentives and that it had big gain from the sale of a stake in its former parts division.
GM stock closed at $31.42 on Thursday, up 12 cents.
If Treasury's remaining shares were sold at the current price, Treasury would lose about $10.8 billion on its investments in GM.
Treasury Secretary Timothy Geithner said in a speech in Detroit last month that the administration expected to lose money on its investments in the auto industry.
He said, "We didn't do these things to maximize return. We did them to save jobs. The biggest impact of these programs was in the millions of jobs saved."
AP Auto Writer Dee-Ann Durbin in Detroit contributed to this report.