GM Files Plan for Fall Initial Public Stock Offering
DETROIT - General Motors Co., moving to unwind itself from government control, filed plans to go public and begin selling common shares as early as this fall, Automotive News reported.
The filing -- anticipated for weeks -- came just 13 months after GM was restructured in bankruptcy with $50 billion in direct aid from the U.S. government.
GM 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 sold and the price range for the offering have not been determined, the automaker added.
GM hopes to raise $12 billion to $16 billion with the stock sale, Bloomberg News reported, making it among the biggest initial public offerings ever.
To make the offering appeal to a wider group of investors, including hedge funds, GM said it may also issue preferred shares.
In a bid to preserve cash, the automaker said it does not plan to pay a dividend on the common shares after the initial offering.
In the filing, GM said weak sales, underfunded pensions and the success of its restructuring efforts in Europe pose risks for the automaker.
While the auto industry has recovered this year, GM said "there is no assurance that this recovery in vehicle sales will continue or spread across all our markets."
Still, the automaker said it expects its global market share to rise to 12.4 percent by 2014 from 11.9 percent this year.
GM's ability to achieve long-term profitability depends on the company's success at enticing customers to consider its products when purchasing a new vehicle, the filing said.
"Our competitors have been very successful in persuading customers that previously purchased our products to purchase their vehicles instead," the company said.
In North America, GM also blamed its market-share losses over the past three years on negative consumer brand perception. To overcome consumer concerns, the automaker plans to enhance the fuel efficiency of its model lineup - a strategy it said is also key to sustained profits.
The success of the IPO will go a long way in determining how much American taxpayers will recover from their 61 percent stake in the automaker. Bloomberg said GM wants to sell a fifth of the government's 304 million shares.
After the sale, the government's stake in GM is expected to drop below 50 percent.
In a statement Wednesday, the Treasury Department said it “will retain the right, at all times, to decide whether and at what level to participate in the offering.”
In addition to the federal government, a UAW retiree health-care trust controls 17.5 percent of GM. Other stakeholders include the Canadian government, with 11.7 percent, and former GM bondholders, with 9.8 percent.
In its statement, GM said the common shares would be sold by "certain stockholders."
In recent weeks, President Obama has pledged the government will recover all the taxpayer money his administration provided to bail out the auto industry last year.
For the government to recoup its full investment, GM's market value must reach $70 billion -- or 10 times the automaker's market capitalization before it sought bankruptcy protection in June 2009.
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