GM Preparing To Resell Shares

A year and a month after declaring bankruptcy, General Motors is ready to come out of government ownership and start selling public stock again, the Associated Press reported this week.

The company began filing S1, the necessary paperwork for an initial public offering (IPO), last Wednesday. Totaling some 700 pages, the document detailed the risks and benefits to investors interested in acquiring GM stock.

No specifics were given on the S1, such as when the shares would be available and the number of shares to be offered. However, many experts believe the IPO could take place before the end of the year, even within the next two months.

The S1 also didn't specify how much of the GM stock the government would release, although the IPO is expected to shrink its stake in the company. Outgoing CEO Ed Whitacre said the Treasury would still own considerable interest in GM after the sale.

Some 61% of GM is now controlled by the U.S. government after the company received $50 billion in aid last year. GM has so far paid back $6.7 billion, with the rest converted into ownership stake. The Canadian government is also a stakeholder.

GM has said its stakeholders would start by selling common stock while it focused on selling preferred shares. Proceeds from the latter will be used for various business expenses, the company added.

Analysts say the IPO could generate as much as $20 billion in sales, although no exact figure was given in the filing. GM currently needs $70 billion to clear its debt to stakeholders, which means there may be more sales over the next several months.

 

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