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Underwriters add to size of GM stock deal


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Underwriters add to size of GM stock deal


General Motors said the underwriters in its recent initial public offering have exercised their over-allotment of an additional 71.7 million shares of common stock, bringing the total size of the deal to $23.1 billion.

The additional shares were worth $2.37 billion. The underwriters also exercised the right to purchase an additional 13 million shares of mandatory convertible junior preferred stock from the Detroit automaker, for a total of $650 million.

The closing for the additional shares is expected to take place on Thursday.

GM stock rose 32 cents, or nearly 1%, to close Friday at $33.80.

The sale of the additional shares also means the government was able to sell another 54 million shares of stock it owned, getting back another $1.8 billion.

In the initial offering, the government received $11.7 billion from the sale of 358.5 million shares.

The government put $49.5 billion into GM as part of its bailout of the automaker.

The IPO included the sale of 478 million shares of common stock for a total of $15.77 billion, and 87 million shares of mandatory convertible junior preferred shares, for $4.35 billion.

Shares began trading on Nov. 18.

The convertible shares become shares of common stock on Dec. 1, 2013, unless they're converted before that date. They carry a 4.75% dividend rate and a liquidation preference of $50 per share.

Read more: Underwriters add to size of GM stock deal | freep.com | Detroit Free Press http://www.freep.com/article/20101127/BUSINESS0101/11270358/Underwriters-add-to-size-of-GM-stock-deal#ixzz16gOAjqOL

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Underwriters Boost GM Stock Sale By Additional 72 Mil Shares

“Over-allotment” generates additional $1.8 bil for U.S. taxpayers.

by Paul A. Eisenstein on Nov.29, 2010

GM's IPO officially becomes the biggest ever with the successful sale of another $2 billion in common shares.

The underwriters of General Motors’ recent IPO have exercised an option permitting them to sell another 71.7 million shares, a so-called “over-allotment” worth $2.37 billion.

Along with another 13 million shares of convertible preferred stock, that brings the final tally for the automaker’s initial public offering to $23.1 billion, far exceeding the previous record IPO, the $19.5 billion raised by Visa in 2008.

The U.S. Treasury was able to sell another 54 million of its own shares through the over-allotment, worth $1.8 billion. As a result of the IPO, taxpayers have now roughly halved their stake in the company critics dubbed “Government Motors,” after last year’s federal bailout.

The IPO was held on November 18th and initially covered 478 million shares of common stock, worth $15.77 billion, as well as 87 million shares of preferred, worth $4.35 billion – a total just slightly exceeding the 2008 Visa offering.

The convertible preferred shares convert to common no later than December 1, 2013. They carry a 4.75% dividend rate and a liquidation value of $50 apiece.

The final tally for the IPO is significantly better than what the underwriters had first anticipated. Just days before GM resumed public trading, the size of the common share offering was increased by 31%. And the price was bumped from an estimated $26 to $29 per share up to $33.

If that price were to hold when the remaining government stock is sold off taxpayers would recover the investment made by the Obama Administration in GM, but would not recoup the original bailout authorized by the Bush Administration in late 2008. In all, the Treasury has put $49.5 billion into General Motors.

Administration analysts have steadily reduced their estimate of the likely losses on the government’s overall automotive bailout program – which also covers Chrysler and Ally, the former GMAC – to around $9 billion. But a further run-up in stock prices could lower the losses substantially.

Earlier this month, Chrysler CEO Sergio Marchionne said that the GM IPO “has done a lot…for us,” suggesting it should help improve demand for the smaller maker’s own IPO which is tentatively planned for the second half of 2011. (Click Here for more.)

GM stock has pushed as high as $35.99 during intra-day trading, though it has begun this week on a low note, tumbling 24 cents when the market opened for the post-Thanksgiving holiday. Nonetheless, Standard & Poor’s has forecast it should reach the $36 per share mark over the next 12 months



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