U.S. government is likely to take a loss on GM IPO
By Andrew, 05 Sep, 2010. 0 Comments
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Sources say that it’s likely that the US government will take a loss on General Motors Co. in the first offering of its stock. The sources -- six people who have knowledge about the groundwork for the landmark IPO – said that succeeding offerings of the government's holdings will make a profit depending on how investors trade the newly listed stock. These sources added that whether taxpayers will be paid in full for the $50 billion bailout of GM could be uncertain for years. In particular, it might take the Treasury over three years to sell down its remaining stake in GM after the IPO, according to one source. This means that the final accounting would be moved into the next presidential term. Pricing the initial GM shares lower than the cost to taxpayers is in keeping with the typical Wall Street practice of giving a discount to the first investors in a new stock. In addition, doing so could help relieve the concerns of investors amid the slow recovery of the US economy and steady auto sales. [via autonews - sub. required]
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