The U.S. government plans to sell 40% of its General Motors stock within weeks and sell the rest of its shares within 12 to 15 months, officials announced Wednesday.

In turn, GM said it would buy back 200 million shares from the U.S. Treasury as soon as January in a $5.5 billion deal. That would reduce the government stake from 26% to 19%.

Treasury's plan to liquidate its equity stake in GM by selling its remaining 300 million shares will end the government's ownership position in the automaker.

"This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM's progress and our future," CEO Dan Akerson said.

GM said it would pay $27.50 per share in the buyback deal, a 7.9% premium over Tuesday's closing price of $25.49. The company will record a $400 million charge on its balance sheet in the fourth quarter.

At that share price, the government will take a loss. The government, which said it would sell the rest of its 300 million shares in an "orderly fashion" in the market, needed to sell its 500 million remaining shares at a price of about $53 to break even.

The government has said it wanted to balance its desire to get out of the auto business with the desire to recover more money for taxpayers.

Auto industry analysts have been expecting the Treasury to announce a resolution for its GM shares in early 2013. Some analysts have said a share buyback would be warmly received by the market and attract new investors to GM shares who have been scared off by the government's ownership position.

GM Chief Financial Officer Daniel Ammann said Wednesday that "from our point of view this is very attractive to the company and to shareholders."

"It obviously brings some clarity and certainty around the U.S. Treasury exit and the timing of that, which has been a question in the marketplace," Ammann said. "It's obviously good for the business because of the perception of goverment involvement in the company."

The government plans to immediately remove some restrictions it had placed on GM as result of the company's $49.5 billion bailout. The company will now be allowed to purchase corporate aircraft, for example.

"The auto industry rescue helped save more than a million jobs during a severe economic crisis, but TARP was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time," U.S. Treasury Assistant Secretary for Financial Stability Timothy Massad said.

"Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests."

Nathan Bomey, Detroit Free Press