GM files for landmark IPO
- Source: Global Times
- [08:07 August 20 2010]
- Comments
US auto giant General Motors, which was forced to declare bankruptcy and rely on taxpayer funds to stay afloat, has taken its first step away from government ownership, filing for a sale of its shares to the public.
GM did not disclose the number of stocks that will be offered, or the price range, but the sale is expected to raise between $12 billion and $16 billion.
That could make the initial public offering (IPO) of shares one of the world's largest, and second in the United States only to credit card giant Visa's March 2008 sale that raised more than $19 billion.
The move could prove to be a boon for President Barack Obama in November's congressional elections, providing hard evidence to voters that his economic policies helped pull the country out of its worst economic crisis in decades.
"A successful IPO will be even more evidence that the steps the government took in 2008 and 2009 were good for workers, good for Michigan and good for the nation," Senator Carl Levin of Michigan, a Democrat, said.
In the filing Wednesday with the US Securities and Exchange Commission, GM said it planned to apply for listings on the New York Stock Exchange and the Toronto Stock Exchange.
"The amount of securities offered will be determined by market conditions and other factors at the time of the offering," GM said in a statement.
The stock sale is expected to take place late this year, and the company, which was part of the prestigious Dow Jones Industrial Index from 1925 to 2008, will retrieve its old trading ticker symbol of GM.
The US Treasury Department said separately that it "will retain the right, at all times, to decide whether and at what level to participate in the offering."
An IPO will allow the Treasury to begin offloading the 61 percent stake it acquired in last year's $50 billion bailout of the Detroit-based carmaker.
The timing of the IPO "suits the government and it suits GM," according to Kenneth Elias, a partner at auto sector analyst Maryann Keller & Associates.
However, others warned that GM's announcement was "rushed," cautioning that an under-subscribed offering could be politically harmful for Obama and dent confidence in the automaker's recovery.
"We're looking at a second half that is potentially weaker than the first half," said Dennis Virag, president of the Automotive Consulting Group. "That could certainly hurt the sale of the shares."
"I don't think this is a good time to be going public," Virag said. "It's more political than practical."
Agencies
