Akerson: GM must work to win over skeptical consumers
Dec 19, 2012 (Menafn - Detroit Free Press - McClatchy-Tribune Information Services via COMTEX) --General Motors CEO Dan Akerson told employees today that the company will work to convince skeptical consumers that it has absorbed the lessons of bankruptcy, according to an email obtained by the Free Press.
In a note to employees after the U.S. government announced plans to sell its remaining GM stock within 12 to 15 months, Akerson said "taxpayers rightfully expected us to change the way we do business in exchange for a second chance."
-- RELATED: U.S. Treasury to sell all remaining GM stock; automaker buying back 200 million shares
"There are some who still question whether the rescue was the right thing to do," Akerson wrote. "That's to be expected -- and it's understandable. I believe we can regain their confidence over time by making GM even more successful than it is today."
GM announced today that by the end of the year it would buy back 200 million of its shares from the U.S. Treasury Department for 5.5 billion. The deal reflects a 7.9% premium on Tuesday's closing price.
The U.S. simultaneously announced that it would sell the rest of its shares "in an orderly fashion" in the market within 12 to 15 months, bringing to a close the government's ownership stake in the iconic automaker.
The government delivered a 49.5 billion bailout to GM spanning late 2008 and early 2009, financing the company's Chapter 11 bankruptcy reorganization, which propelled GM back to financial stability and positioned the company for growth.
Still, the government is expected to lose billions on the GM bailout. After the buyback, the U.S. will have recovered 28.6 billion of the bailout funds. It will still own 300 million shares and would have to sell them at a price of about 70 to break even. That's unlikely with the stock trading at about 27.50 right now.
Supporters have argued that the bailout was worth it because it preserved GM and a strong U.S. auto industry. Opponents have said the government shouldn't meddle in private industry.
"As we come to the end of this chapter in our history, I believe most people are glad that General Motors is on the move once again, thanks to the courage and foresight of Presidents Bush and Obama, and the Canadian government," Akerson wrote.
Akerson said GM would maintain a strong balance sheet and would continue to churn out better products.
"The better we do in each of these areas, the closer we'll come to achieving our full potential and earning a place once again among the most admired and profitable companies in the world," he wrote.
Contact: Nathan Bomey at 313-223-4743 or nbomey@freepress.com. Follow him on Twitter @NathanBomey.
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