They remember a couple years earlier, where General Motors was doing its best to stay above water and figure out a restructuring plan, since its current business operations were weighing heavily on its debt-straddled balance sheet.
General was in trouble even before the recession hit in 2008. In 2005, the auto company lost over $10 billion. In 2007, losses amounted to $38.7 billion and sales dropped nearly 50% the following year. Then the recession really hit.
There's no question that 2008 was tough. Chrysler was dragged down and filed for Chapter 11. Ford (F) also suffered massive losses and, while it didn't file for bankruptcy, its stock did trade all the way down to $1, marking the depths of a very hard time in Detroit.After multiple discussions with the government, General Motors ended up with $49.5 billion in government loans. It also agreed to let the Treasury Department own a 60% stake and eventually was forced into Chapter 11 bankruptcy.
The government reduced its stake to 26%, or 500 million shares, after the company resumed trading, and has since lowered it to 19% on the way to unraveling its position completely. General has also been able to repay the government for its efforts on restoring at least one of the Big Three. Well, technically speaking. While General did pay back the cash obligations to the Treasury, the rest of the loan is through its stock. The government would need to sell its entire stock position in the low $50 range to break even. Since it has already begun to unravel its position below that mark, the break-even price would be even higher. So while General Motors did fulfill its obligations, the government will still absorb a multibillion dollar loss. How is the company doing now? Since 2010, the automaker has resumed profitability and remained that way each year since. In fact, it's posting record profit.
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