General Motors Company last night announced it had, as widely speculated earlier this week, filed a registration statement for an initial public stock offering (IPO) with the US Securities and Exchange Commission (SEC). The proposed public offering consists of a mix of common stock and series B mandatory convertible junior preferred stock, the automaker said.
“The amount of securities offered will be determined by market conditions and other factors at the time of the offering. The number of shares to be offered and the price range for the offering have not yet been determined,” the automaker, currently owned about 60% by the US government, said in a statement.
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Trading in GM shares is expected to start between late October and the U.S. Thanksgiving holiday on November 25, sources involved in the process told Reuters, which noted that a stock offering in late October would mean trading would start just before the November congressional elections.
Government officials and GM executives have repeatedly denied any link with the elections.
The 102 year old one time blue chip is expected to return to the New York Stick Exchange under the ‘GM’ ticker symbol it had before the government funded bankruptcy, the news agency added.
“We’re looking at a second half that is potentially weaker than the first half,” Dennis Virag, president of Automotive Consulting Group, told Reuters. “That could certainly hurt the sale of the shares.”
“I don’t think this is a good time to be going public,” Virag added. “It’s more political than practical.”
Morgan Stanley and JP Morgan, BofA Merrill Lynch, Citi, Goldman, Sachs & Co, Barclays Capital, Credit Suisse, Deutsche Bank Securities, RBC Capital Markets and UBS Investment Bank will be the joint book-running managers for the offering.
The move is a landmark step toward GM selling shares to the public again and ending the government’s majority ownership of the automaker, a key goal of outgoing chairman and CEO Ed Whitacre.
The filing came 13 months after GM emerged from bankruptcy through a federal bailout and takes the company a step closer to attracting new investors and shedding the government oversight that has divided taxpayers nationwide and, some believe, affected its vehicle sales.
An initial public offering, or IPO, could come as early as November, the Detroit News concurred, adding it would raise billions of dollars to repay taxpayers and generate cash for GM.
The paper noted that the US Treasury and other GM shareholders, including two Canadian governments and a United Auto Workers health care trust, will get their first chance to unload GM shares that, in turn, could be purchased by new investors.
The filing makes plain GM’s desire to end government control and says the Treasury Department and Canadian governments will no longer have the right to appoint any GM board members after the stock offering, according to the paper.
“The stigma of ‘Government Motors’ will disappear over time,” David Cole, chairman of the Center for Automotive Research, told the Detroit News. “If GM has any concerns about the economy or other issues, cash is king. This is a good time to raise some cash as a cushion against the unknown.”
The paper also reported the stock will trade on the NYSE under the company’s familiar ‘GM’ symbol and added the shares will also trade on the Toronto Stock Exchange but the symbol to be used across the border was not identified in Wednesday’s filing.
GM said it would sell up to 640m preferred shares, which would be converted to common stock by 2013, but there were no immediate plans to pay dividends on the common shares, the paper added.
Whitacre has said the government plans to sell at least 11% of its holdings, to cut its stake in GM below 50%.
A source familiar with the matter told the paper the UAW was expected to sell some of its 17.5% stake.
