GENERAL MOTORS (GM) took a big step towards repaying a controversial taxpayer-funded bailout by declaring plans for a stock offering that represents a critical test for the Obama administration.
The automaker said it planned to list the shares on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange in an initial public offering (IPO) that comes amid a weak global market for cars that is vulnerable to a further downturn.
Morgan Stanley, JPMorgan, Bank of America Merrill Lynch and Citigroup have been selected as the lead underwriters for what is expected to mark one of the biggest global IPOs.
GM’s filing with US securities regulators did not say how many shares would be sold or give an expected price range for the IPO. The offering could raise up to $20 billion, though analysts warned its size depends on still-untested investor demand for a restructured automaker with only two consecutive quarters of profits.
“I don’t think this is a good time to be going public,” said Dennis Virag, president of Automotive Consulting Group. “It’s more political than practical.”
Trading in GM shares is expected to start between late October and November 25th, according to people involved in the process. A stock offering in late October would mean trading would start before the November congressional elections.
Government officials and GM executives have repeatedly denied any link with the elections.
The Obama administration wants to be able to cast the $50 billion GM bailout as a financial success. The 102-year-old one-time blue chip is expected to return to the NYSE under the GM ticker symbol it had before the government-funded bankruptcy.
Adding a stock listing in Toronto underscores the role the Canada played as junior partners to the US treasury in keeping GM from liquidation.
GM chief Ed Whitacre, who steps down in September, has said the automaker needs to distance itself from government ownership and the label “Government Motors” to build momentum.
“I just think that the risk of failure with the IPO is bigger than the risk of being known as Government Motors, said Brad Coulter, a restructuring specialist at O’Keefe Associates. – (Reuters)
