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More GM stock sold; government stake drops to 33 percent


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More GM stock sold; government stake drops to 33 percent

Christina Rogers / The Detroit News

Underwriters for General Motors Co.'s initial public offering exercised an option Friday to sell more stock — a move that reduces the U.S. government's stake in GM to 33 percent.

The sale of an additional 71.1 million shares of common stock and 13 million in preferred stock brings the total size of GM's initial stock sale to $23.1 billion, the largest in history.

It also boosts by $1.8 billion the government's share of the sale, which combined with last week, now totals $13.5 billion.

The common stock sale was worth $2.37 billion, with each share selling for $33 — the initial offering price.

Detroit-based GM said in a news release that the preferred stock, selling for $50 a share, raised $650 million.

Banks underwriting GM's IPO had up to 30 days to purchase an additional 15 percent in common and stock shares to fill more investor orders.

The automaker returned to the public markets Nov. 18, after selling $20.1 billion in common and preferred stock in this first round. About 90 percent of the IPO was sold to U.S. investors, with individuals accounting for nearly a fifth of buyers.

Demand for stock in the new GM ran high before the initial sale, with investors lining up to buy into the company that collapsed into bankruptcy 18 months ago.

The stock was oversubscribed multiple times over, meaning demand far exceed the number of shares offered.

GM executives and underwriters initially said shares would be priced in a range between $26 and $29 but set a final $33 price.

Trading under its old "GM" ticker symbol, the automaker closed on its first day of trading at $34.19, up 3.6 percent in extremely heavy trading, with 447 million shares changing hands.

Investors hoping for a big bounce in the stock were disappointed, as the shares ended off their highs. Since then, the stock has been trading strongly, although the price has yet to crest its high of $35.99. On Friday, it closed at $33.80, up 32 cents.

The sale on the additional shares is expected to close Thursday, GM said.

In the initial sale, Nov. 18, the government sold 358.8 million shares, raising $11.7 billion and shrinking its stake in GM from 61 percent to 37 percent.

The government will have to sell its remaining 500 million shares of common stock at average about $52.80 a share to break even on last year's $49.5 billion bailout of the automaker. By year's end, the government will have recovered $23 billion of its initial bailout investment.

GM has said it intends to use money raised in its preferred stock sale to pay off debt and shore up its pension funds.

The preferred stock, which carries a fixed dividend, but doesn't give the owner voting rights, will automatically convert to common stock in 2013.

From The Detroit News: http://detnews.com/article/20101127/AUTO01/11270325/More-GM-stock-sold--government-stake-drops-to-33-percent#ixzz16gKHLgqE

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