GM may sell shares for as much as $33 in an initial public offering

Article by Christian Andrei, on November 16, 2010

Because of the strong demand, General Motors Co. may sell shares for up to 14% higher than the original plan, equivalent to $33 in an initial public offering, according to four insiders.

The sources also said that the number of shares may even be increased. Earlier this month, GM said that it could raise as much as $10.6 billion by selling 365 million shares for up to $29 each.

Demand for the stock had increased due to rising vehicle sales and earnings at GM as well as a rapidly growing equity market.

As a result, the company and its banks decided to encourage either raising the price range or adding shares. One source said that GM will sell $4 billion worth of preferred stock, up from $3 billion. If the price is set at $33, GM would be able to raise $12 billion selling common stock.

If an overallotment option for the underwriters to sell more shares is included, the offering would raise $13.9 billion.

One source also disclosed that JPMorgan Chase & Co. and Morgan Stanley, which are two of GM's lead investment banks, are urging the US Treasury (which owns 61% of GM) to offer more shares than the 419.8 million that would be sold if the current overallotment option is exercised. [via autonews - sub. required]

Topics: gm, ipo, shares, united states

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