Sources indicate that General Motors Co. is preparing for an initial public offering that will end with the US as a minority owner. The sources say that GM aims to sell 20% of the government's 304 million shares. This will lower the Treasury Department's stake from 61% to less than 50%. However, the final decisions on which owners will sell how many shares haven't been made and may still change.
It's likely that a registration statement will be filed in August, as it aims for a November stock sale. The sale, which will likely raise $10 billion to $15 billion, will depend on GM's performance, the strength of the economy and the health of the IPO market. According to these sources, a filing in August indicates that GM will have the IPO prepared near the time of the Nov. 2 congressional elections.
Joe Phillippi, president of AutoTrends Consulting, said that if sufficient Treasury shares are sold, President Barack Obama would be able to help Democrats running for office by asserting that his administration's restructuring of GM is paying off.
He thinks that with a successful offering, the government will be able to boast that it has taken GM through bankruptcy, has turned it over to independent management and is now taking it public.
He claims that the government will use this in the campaign. One of the sources said that GM may also issue new shares to raise cash and sell shares owned by Canada and a union-led retiree health-care trust. [via autonews - sub. required]