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GM gets ready for public stock offering

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GM gets ready for public stock offering

Carmaker to file statement soon; IPO could come in Nov.

David Shepardson / Detroit News Washington Bureau

Washington -- General Motors Co. plans to file as early as next week a detailed statement outlining its proposed initial public stock offering, according to officials familiar with the planning.

The registration statement also will announce that Morgan Stanley and JPMorgan Chase & Co. will be lead underwriters for the sale of part of the U.S. government's 60.8 percent stake in GM. The sale could take place before the November election.

The two banks, and smaller underwriters, are expected to share a fee for handling the sale, which could range from $75 million to $150 million based on the stock sold -- lower than most IPOs, according to one U.S. Treasury Department official.

"General Motors is going to have an IPO," White House chief of staff Rahm Emanuel told ABC in an interview this week. "We're righting an industry that was not doing itself, or the American people or its workers, the right thing."

The Treasury also has hired New York investment bank Lazard Frères & Co. to advise it on GM's stock offering.

An IPO will allow GM to again be a publicly traded company, the first step toward the government selling its ownership stake.

The initial selling price also will provide an early snapshot of how much taxpayers will recoup from their $50 billion rescue of the automaker. By some estimates, taxpayers could lose $10 billion or more on the bailout.

Treasury Secretary Timothy Geithner said Tuesday the IPO would come in the fourth quarter or early next year. He also said the government's projected losses on the auto industry bailout continue to narrow.

"The auto industry has ... undergone significant restructuring, and its prospects for repaying the government have improved," Geithner told the Congressional Oversight Panel that oversees the auto bailout fund.

GM spokeswoman Renee Rashid-Merem declined to comment on the timing of an IPO.

After a registration statement is filed, GM must get approval from the Securities and Exchange Commission before it can hold an initial public offering.

The registration statement will include detailed financial information about GM. It also will likely indicate how much stock the government is willing to sell, and how many shares can be sold to the underwriters, which can profit by selling them.

The Treasury swapped $43 billion of its $50 billion bailout for 60.8 percent of GM, and holds $2.1 billion in preferred shares.

Some Wall Street analysts predict the government will sell a third of its stake -- roughly 100 million of its 500 million GM shares -- in an initial sale.

That first sale could raise between $10 billion and $15 billion or more, which would put it among the three largest IPOs in history. One Treasury official said a GM stock sale could raise more than $20 billion and could end up as the largest IPO in history.

Kirk Ludtke, a senior vice president and auto industry analyst at CRT Capital Group LLC in Stamford Conn., said a GM IPO "is largely subject to market conditions: How willing are investors going to be to take risks?"

Investors may see just one more quarterly earnings report before having to decide whether to invest in post-bankruptcy GM.

"Obviously, the company has to perform," Ludtke said. "We know the government wants to monetize its position quickly and before the November elections."

GM posted a first-quarter profit of $865 million and has said it will invest $3 billion this year in its plants. The company has repaid $6.7 billion in outstanding U.S. government loans and $1.4 billion to Canada.

It's unclear how many shares other GM owners will be offered in an IPO. A United Auto Workers retiree health care trust fund holds 17.5 percent of GM, while the Canadian federal and Ontario governments hold 11.7 percent.

Ontario Premier Dalton McGuinty said the Canadian governments will be "patient" before deciding when to sell GM stock swapped for $9 billion in loans.

A bankruptcy court will have to decide how and when bondholders of the pre-bankruptcy GM will be able to sell their 10 percent stake in the new GM.

The White House has been defending its unpopular decisions to rescue GM and Chrysler Group LLC, and is considering sending President Barack Obama on visits to auto plants this summer.

GM's performance is certain to remain a political football in this congressional election year.

Many Democrats have noted that at least 1.1 million jobs would have been lost if the companies had been allowed to collapse.

Republicans have accused the administration of exercising undue influence over the company's management and said GM misled the public over its repayment of government loans.

From The Detroit News: http://www.detnews.com/article/20100623/AUTO01/6230334/1148/auto01/GM-gets-ready-for-public-stock-offering#ixzz0rg8oXLc7

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Report: GM to file soon for initial public stock offering

01:18 PM

General Motors may have a "cash back" offer for taxpayers soon. David Shepardson of the Detroit News Washington Bureau is reporting that GM will register its initial for public stock offering as early as next week and that the sale, which would make it again a public company, could come in November.

Shepardson, whose story is here with more details, said the information came from "officials familiar with the planning." A registration statement would outline the proposed offering and financial condition of the company. After the filing, an OK from the Securities and Exchange Commission is required for the IPO to proceed.

An IPO would allow the federal government to begin recouping part of the $43 billion in bailout money it traded for a nearly 61% stake in the company. The success of the offering in demand and price will be a good indication of how much of the $43 billion in taxpayer money the government ever will be able to get back. The GM filing should indicate how much of its holding the government would begin selling.

Shepardson reports the sale could take place before the November mid-term elections. The GM bailout continues to be politically controversial and the Obama administration likely would not be displeased if the IPO happened and some taxpayer cash came back before voters go to the polls.



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GM ready to move on IPO soon

Automotive News -- June 23, 2010 - 11:58 am ET

UPDATED: 6/23/10 3:15 p.m. ET

DETROIT (Bloomberg) -- General Motors Co. is preparing for an initial public offering that would sell 20 percent of the Treasury's stake in the automaker and reduce the U.S. to a minority owner, said two people familiar with the plan.

The aim is to sell a fifth of the government's 304 million shares, said the people, who asked not to be identified revealing private discussions. That would reduce the Treasury Department's stake to less than 50 percent from 61 percent now. Final decisions on which owners will sell how many shares haven't been made and may change, the people said.

A registration statement may be filed in August, aiming for a November stock sale, said four people familiar with the plan. The sale will probably raise $10 billion to $15 billion, depending on the company's performance, the strength of the economy and the health of the IPO market, the people said.

An August filing means GM could have the IPO ready around the time of the Nov. 2 congressional elections, said the people. If Treasury can sell enough shares, President Barack Obama could help other Democrats running for office by arguing that his administration's restructuring of GM is paying off, said Joe Phillippi, president of AutoTrends Consulting.

“The government wants a successful offering soon so they can say that they took the company through bankruptcy, turned it over to independent management and are taking it public,” said Phillippi, who is based in Short Hills, N.J. “This would be part of the campaign spin.”

The automaker may also issue new shares to raise cash and sell shares owned by Canada and a union-led retiree health-care trust, one of the people said.

Selim Bingol, a GM spokesman, declined in an e-mail to comment on the matter.

GM has invited analysts, potential investors and representatives of its current shareholders to Detroit for a review of the business on June 29, said a spokeswoman, Renee Rashid-Merem. GM will also give the members of the financial community a look at current and future models, she said.

The IPO will be managed by JPMorgan Chase & Co. and Morgan Stanley, people familiar with the matter have said. They will collect fees of 0.75 percent of the sale, said a person briefed on the matter. Such fees would be a quarter of the usual rate for large stock sales.

JPMorgan had offered to accept payment in equity instead of cash, though that idea was rejected by GM and Treasury, two people said.

The U.S. will probably sell its GM stock over “a few years,” CFO Chris Liddell said in a May 17 Bloomberg Television interview.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100623/OEM/100629946/1424#ixzz0riO55BG2

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