GM says thanks for the helping hand
BY RON HAMMERTON | 25th Nov 2010
In a national television commercial showing images of some epic failures and then triumphant reversals, bracketed by a boxer being knocked down and then getting back on his feet, GM delivered the message to US taxpayers: "We all fall down. Thank you for helping us get back up."Timed to coincide with America’s Thanksgiving celebration, the TV ad comes just a week after GM’s successful IPO that netted $33 a share, helping to at least partly repay the US government for stepping in last year when America’s biggest motor company slid into insolvency and chapter 11 bankruptcy protection.
The government tipped $49.5 billion into GM in loans and equity to save the company, taking a 60.8 per cent stake in the ‘New GM’ in the process.
Last week, the government recouped $11.7 billion when it offloaded almost 360 million shares in GM’s initial public offering (IPO), slicing its ownership of GM from almost 61 per cent to 36.9 per cent.
That could fall to 33.3 per cent if underwriters exercise their option to sell another 53.8 million shares worth $1.8 billion by December 18.
Ultimately, the US treasury wants to sell all of its remaining shares, which at $33 a share represents a further $18.2 billion in value.
As well, GM – often ridiculed as ‘Government Motors’ in the 16 months since it emerged from chapter 11 – has repaid billions of dollars in loans and guarantees to the treasury, which has now recouped $250 billion from all companies propped up by its emergency Troubled Asset Relief Program (TARP) set up by the Obama government in the darkest days of the global financial crisis.
Announcing the receipt of the $11.7 billion from the GM IPO, US acting assistant secretary for financial stability Tim Massad said: "Our temporary assistance for the US auto industry saved more than one million jobs across the industrial heartland of America and – like the overall TARP program – is on track to cost far less than anyone had first anticipated.”"General Motors' successful initial public offering is another important milestone in our efforts to recover TARP funds on behalf of the American taxpayer."Immediately after the New York Stock exchange closed following the successful GM IPO last week, GM executives called staff together at GM’s head office to celebrate “GM’s first day as a public company”.
This week, GM revealed its thank-you ad that draws on images both comic and tragic to tug the heart strings of the US public.
In the ad set to sombre music with no voice-over, characters diverse as stunt man Evel Knievel (falling heavily from his motorcycle), John Belushi (in a scene from the film Animal House shouting “I am not going to take this”) and cartoon character Popeye (first sinking to the bottom of the ocean and then rising after eating spinach), appear in short grabs, along with images of a space rocket failing on the launch pad, stock traders in despair and a boxer being knocked down.
In a more practical demonstration of its rise from the dead, GM this week announced a $163 million investment in engine and casting plants in Michigan and Ohio to rev up production of its 1.4-litre Ecotec turbo-charged four-cylinder engine for Cruze, Volt and ‘a new Chevrolet small car to be built in the United States”.
GM says the move will protect 184 jobs.
GM says it has spent more than $3.3 billion in the US since it emerged from bankruptcy, generating about 8000 jobs.
Next Tuesday, GM – headed by new CEO Dan Akerson – will trumpet production of its Volt range-extender plug-in hybrid at the Detroit Hamtramck assembly plant.
Mr Akerson was one of several GM executives to put his money where his mouth is in the GM IPO, buying more than $500,000 worth of shares, some in the staff offer and others after the float.
Chairman Ed Whitacre also took a $526,000 slice of shares, mostly bought on the open market after the float.
