GM's offering should include a pitch to public

[NINETY EIGHT REGENCY]

GM's offering should include a pitch to public

BY SUSAN TOMPOR

FREE PRESS COLUMNIST

Why can't we all just pull out our checkbooks -- and maybe show last year's Form 1040 -- to get our hands on shares of the initial public stock offering in the new General Motors Corp.?

It's a quirky idea that's generating some buzz in the world of IPOs. The thinking is that since the federal government used our tax dollars to rescue GM, small investors/taxpayers ought to benefit when the new company first offers stock for sale.

Six years ago, when Google went public, we heard talk about finding a way to offer an IPO-for-everyone. The Google offering was designed as an auction, open to the average Joe -- or Jo -- and supposed to be very unlike IPOs of the past, which went to the well-connected and very rich.

The new GM IPO has even more reason to include a populist pitch. When GM was on the brink of collapse, plenty of taxpayers protested over their money going to save it.

David Menlow, president of IPOfinancial.com, an investment research firm in Millburn, N.J., said it's only right now that John and Jane Q public, as individual investors, should be able to easily buy shares in the new GM, which is expected to make its offering later this year.

Menlow wants a "good little red, white and blue display."

CNBC personality Jim Cramer took up the cause on TV and Twitter: "Why shouldn't we all get shares in GM?" he asked.

In an e-mail, Cramer explained that the government should allow the public to buy into the new GM through the Web, instead of the usual methods of having an IPO distributed to clients of the firm that is doing the deal.

"That way it wouldn't just be rich JP Morgan clients that benefit," Cramer said. "We all could!"

Could it work?

Maybe. But it would take some doing.

Much Isn't Known

Right now, IPO experts and others do not know the structure of the GM offering -- the date, price range for the stock, how the company would be valued, and how many shares will be sold. We also don't know whether more stock will be offered later.

"We don't have any idea about anything," Menlow said.

General Motors repaid the final $5.8 billion of government loans in April. Even so, the federal government still owns a 61% stake. A public stock offering would enable the government to sell at least some of its ownership stake in GM.

Would people want to risk their own money on a car and truck company that rolled out of bankruptcy?

There would be no government mandate that you buy GM stock. But some experts say many individuals would want to buy into a new company that has spun off its predecessor's debt and dead weight.

Menlow maintained that when GM goes public, the initial price for the IPO likely won't show the full value of where GM could be in two years or so.

The IPO price, Menlow said, is likely to be held back by many concerns. After all, we're still dealing with continued worries about the strength of the recovery, a high jobless rate and the ongoing fear that consumers will need to control spending.

GM's official word is that the company will launch an IPO when the conditions are right and the company is ready.

Who knows what that means? We did watch President Barack Obama drive that electric-powered Chevy Volt on the factory floor at General Motors' Detroit-Hamtramck Assembly Plant in late July. Does that seem like a subtle step toward a roadshow?

As an aside, many old GM bondholders will get shares in the new GM at some point. They are now bondholders of Motors Liquidation, which owns a 10% stake in "new GM."

Shares of the new GM will be distributed to Motors Liquidation bondholders and other creditors after Motors Liquidation confirms a plan of reorganization with the court and settles its assets.

As for the new GM IPO, it could well be time to offer a new model for everyday investors.

It would be wrong, Menlow maintains, for this IPO to be done as any other.

"It's not a proper way to close one of the most important chapters in government intervention," he said. "It's got to be a new platform to achieve moral payback for the taxpayers."

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