US: Chief confirms GM started on IPO process
Whitacre speaking at Traverse City
General Motors has started on an initial public offering of shares that could be the largest ever for the US market but hasn't decided on the timing, chief executive Ed Whitacre said. He also confirmed a revamp of the US dealer network, hinted second quarter results would show a profit, and said GM may hire more factory workers and possibly reopen a shuttered plant.
The IPO has long been expected but this was the first time GM had confirmed publicly it was working on the move to return it to public ownership and reduce the US government's majority control just over a year after bankruptcy and a controversial US$50bn bailout.
Whitacre, at an annual auto industry conference in Traverse City, Michigan, also told reporters GM would announce second quarter results next week showing that the restructured company is making money despite a slow rebound in the US economy.
"We are working on an S-1," Whitacre told Reuters, referring to the US Securities and Exchange Commission registration statement required for a securities offering.
"I don't know when we are going to be able to file it because we still have a lot to do. It's not in the 'way, way out there,' but we still have a lot to do," he added.
The automaker has been lining up bankers for a stock offering that will give the US Treasury an opportunity to reduce its 61% stake.
Unnamed sources had said GM's initial target was to complete the regulatory paperwork for an IPO by the middle of August but Whitacre said it would take longer to prepare an IPO to take the US government to a minority ownership position and allow GM to distance itself from lingering consumer anger with its unpopular bailout.
"We want the government out, period. We don't want to be known as Government Motors," he said.
If GM were able to complete a stock offering by November, that would also provide the Obama administration with a sign of progress in its message that its unprecedented intervention in the US auto industry has been a success.
Ron Bloom, the White House adviser overseeing the government's investment in GM and Chrysler, told Reuters he believed GM was still on track for a stock sale by the end of the year.
"We're hopeful it can be done this year but we're going to do it in a proper and thoughtful way. Obviously financial markets and other matters will have to be taken into account," he said.
Whitacre said it could take months for the SEC to approve a registration statement and said the automaker also needed time to court potential investors with a road show.
Part of that message will be that GM is on track for improved profitability because it is able to sell new models at higher prices and keep leaner stock with its dealers.
Whitacre, 69, declined to say how long he would stay on as chief executive and chairman at GM.
In wide-ranging comments to reporters, he also said the automaker had completed a roughly 25% reduction of its US dealership network to about 4,500 that goes along with cutting from eight brands to Chevrolet, GMC, Buick and Cadillac, is also considering reopening one of its closed plants and, after hiring several thousand workers this year, could add more.
GM officials would not say which of dozens of plants closed in recent years could be reopened but the New York Times noted that two plants, in Spring Hill, Tennessee, and Janesville, Wisconsin, were given standby status. At the time, executives said the plants could be brought online if more production were needed.