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U.S. to begin selling GM stock

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U.S. to begin selling GM stock

About 20% to be offered this year

BY JUSTIN HYDE

FREE PRESS WASHINGTON STAFF

WASHINGTON -- General Motors will start the process of putting its shares up for sale by August, with an eye on launching the sale by mid-November, according to two people familiar with the plan.

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But no firm decisions have been made about how many of those shares will be drawn from any of GM's owners -- including the federal government and the UAW trust fund for retiree health care.

Analysts have speculated the sale could generate $10 billion or more, placing it among the largest U.S. corporate share offerings.

To help lay the groundwork for the sale, GM plans to hold a daylong meeting with financial analysts and investors next Tuesday at the Warren Tech Center.

The event is to include comments from CEO and Chairman Ed Whitacre and a ride-and-drive of new models.

President Barack Obama has long said getting rid of the 60.8% stake in GM owned by the government was a top priority, and Treasury officials have indicated that they would sell the stake even if it meant sacrificing some return on the $50.7 billion spent rescuing the automaker.

The initial public offering will be led by Morgan Stanley and J.P. Morgan.

In addition to the 60.8% equity stake, the government also holds $2.1 billion in preferred GM shares. Treasury also owns 9.9% of Chrysler.

Earlier this year, the U.S. government estimated it would lose about $24.6 billion of the roughly $86 billion it spent rescuing Detroit's auto industry.

While Ford passed on government assistance, GM and Chrysler went through government-backed bankruptcies that have been controversial.

Chrysler filed for bankruptcy on April 30, 2009, and emerged on June 10 that same year.

GM filed for bankruptcy on June 1, 2009, and the new company emerged the following month.

Treasury Secretary Tim Geithner told an oversight committee this week that the auto industry losses would be less than expected thanks to a recovery in U.S. auto sales.

Since 1999, four U.S. IPOs have exceeded $5 billion -- Visa's $19.7-billion deal in 2008, AT&T Wireless Group's $10.6-billion offering in 2000, Kraft Foods' $8.68-billion deal in 2001 and United Parcel Service's $5.47-billion sale in 1999, according to data compiled by Bloomberg News.

The timing of the GM sale was first reported by Bloomberg.

link:

http://www.freep.com/article/20100624/BUSINESS01/6240420/1331/BUSINESS01/U.S.-to-begin-selling-GM-stock

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