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Treasury Dept. hires investment bank to advise on GM IPO sale

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Treasury Dept. hires investment bank to advise on GM IPO sale

David Shepardson / The Detroit News

Washington -- The U.S. Treasury Department hired New York investment bank Lazard Frères & Co. to advise it on General Motors Co.'s initial public stock offering.

The Treasury signed the contract with Lazard on Monday and made it public Friday. Lazard will counsel Treasury on selling its stake in the automaker.

The government owns 61 percent of GM, which it swapped for about $43 billion of the $50 billion it loaned to the automaker. GM has repaid $6.7 billion. The advice also may cover the Treasury's investments in Chrysler Group LLC and Ally Financial Inc., formerly GMAC Inc.

Lazard will receive a monthly fee of $500,000 for the first year, which will drop to $250,000 if a sale is not completed in that time.

Lazard's work will include valuing the government's assets, offering advice on potential transactions and analyzing alternatives for disposing of the assets.

GM reported an $865 million first-quarter profit Monday and said it would go public when it was ready but offered no timetable. It was GM's first quarterly profit since 2007.

Also Friday, Treasury lowered its estimated losses on the $85 billion auto industry bailout to $24.6 billion, from $28.2 billion.

Other outside estimates, from the Congressional Budget Office, have predicted losses of about $30 billion on the bailouts of GM, Chrysler and Ally.

"The performance of the domestic auto industry has improved," Treasury said Friday.

The new estimate lowers the government's expected loss from the $700 billion Troubled Asset Relief Program by $11.4 billion, to $105.4 billion.

The auto rescue money came from the TARP fund.

From The Detroit News: http://detnews.com/article/20100522/AUTO01/5220324/1148/auto01/Treasury-Dept.-hires-investment-bank-to-advise-on-GM-IPO-sale#ixzz0oqncuYCp

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