The U.S. Treasury does not plan to start selling its remaining shares in General Motors Co until August at the earliest, after the automaker's second-quarter financial results, people familiar with the matter said.

The Treasury, which holds a 32 percent stake in the top U.S. automaker, will wait on a secondary offering in light of GM's recent share performance, and the earliest possible time for its follow-on sale is August, these people said.

The direct sale to GM of a portion of Treasury's $16 billion stake has been suggested as a way to help alleviate the overhang on GM's stock stemming from Treasury's holding, these people said, but the U.S. government is opposed.

Six months after GM's $23.1 billion initial public offering, investors have been speculating that Treasury might rush to sell its remaining stake after the lock-up period for selling by major shareholders expires on May 22.

However, Treasury has decided to delay a secondary offering for at least several months while concerns around oil and supply disruptions from the earthquake in Japan ease, and in order to provide investors with at least another quarter of GM's improving financial performance, these people said.

The decision was also made as Treasury wanted to avoid the process of another S-1 regulatory filing -- which would require a potentially lengthy review by the U.S. Securities and Exchange Commission -- the sources said.

Beginning July 1, GM is eligible to make an S-3 filing instead, which would allow the Treasury to sell shares without having to undergo an SEC review.

The sources asked not to be identified because the matter is not public. A Treasury spokesman declined to comment.

The timing of any offering is entirely in the hands of the Treasury Department. Our focus continues to be on profitable global growth, further strengthening our balance sheet and fully funding our pension plan, GM spokesman Jim Cain said.

While the Treasury is looking at the months of August, September, November and December for a possible secondary offering, it has not committed to any specific time, the people familiar with the matter said.

GM shares were up 13 cents, or 0.4 percent, at $31.43 on Thursday afternoon, below the IPO price of $33.

LIMITED WINDOW

August has a very limited window since the Treasury would need to see GM's quarterly financial results before any follow-on sale and Wall Street is shut down for much of the month, these people said.

The administration of President Barack Obama received a nearly 61 percent stake in GM two years ago in return for its $50 billion bailout of the automaker.

As the Treasury discusses its options with financial advisers, one scenario has been proposed: that GM might use some of its gigantic cash pile -- $36.5 billion at the end of the first quarter -- to buy back a portion of the shares directly from Treasury, people familiar with the matter said.

But selling shares directly to GM at today's depressed share prices could be viewed as a sweetheart deal for an automaker that emerged from U.S. taxpayer-funded bankruptcy just two years ago, the sources said. There are also legal restrictions on buying back shares from one shareholder, although such a transaction could be negotiated.

In addition, the automaker has other uses for its cash, such as addressing its pension shortfall, paying back remaining debt and preferred stock, and investing in vehicles and plants, the sources said.

Before the IPO, GM was touted as a restructured company with a drastically lower break-even point in North America, a leading market position in China and other emerging markets, turnaround potential in Europe and a strong lineup of new fuel-efficient cars such as the Chevrolet Cruze and plug-in hybrid electric Chevy Volt.

But oil prices spiked, hurting sales of higher-margin trucks, and generous discounts to new-car buyers continued. Concerns about supply disruptions after the March 11 earthquake in Japan have also unsettled investors anxious for the Treasury to exit its position in GM.

These factors have all combined to make a follow-on deal a tough sell. But the November IPO - which cut the Treasury's stake in GM from near 61 percent -- was much larger and successful than expected, allowing Treasury to take necessary time to monitor GM's share performance and the industry's recovery, the sources said.

The New York Times reported earlier on Thursday that Treasury Department officials are planning a secondary sale of GM shares for late summer or early fall.

(Reporting by Soyoung Kim; Editing by Derek Caney, Robert MacMillan, Matthew Lewis and Steve Orlofsky)

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