US auto giant General Motors (GM), which was forced to declare bankruptcy and rely on taxpayer funds to stay afloat, has taken a first step away from government ownership, filing for a sale of its shares to the public.
The announcement Wednesday signaled a remarkable turnaround for the Big Three US auto manufacturer, which pulled back from the brink of collapse only after massive infusions of US taxpayer money.
GM did not disclose the number of stocks that will be offered, or the price range, but the sale is expected to raise between US$12 billion and US$16 billion.
That could make the initial public offering (IPO) of shares one of the world’s largest and second in the US only to credit card giant Visa’s March 2008 sale, which raised more than US$19 billion.
The move could prove to be a boon for US President Barack Obama in November’s congressional elections, providing hard evidence to voters that his economic policies helped pull the country out of its worst economic crisis in decades.
Democratic Senator Carl Levin called it “another important step in GM’s rebound and in the recovery of the domestic auto industry.
“A successful IPO will be even more evidence that the steps the government took in 2008 and 2009 were good for workers, good for Michigan and good for the nation,” the Michigan senator said.
In the filing on Wednesday with the US Securities and Exchange Commission, GM said it planned to apply for listings on the New York Stock Exchange and the Toronto Stock Exchange.
“The amount of securities offered will be determined by market conditions and other factors at the time of the offering,” GM said in a statement.
“The number of shares to be offered and the price range for the offering have not yet been determined,” it said.
The stock sale is expected to take place late this year and the company — which was part of the prestigious Dow Jones Industrial Index from 1925 to 2008 — will retrieve its old trading ticker symbol of GM.
The US Treasury Department said separately it “will retain the right, at all times, to decide whether and at what level to participate in the offering.”
The IPO filing came nearly a week after the company announced a US$1.3 billion quarterly profit, a second consecutive quarter of positive earnings.
Company executives have said for several months they were planning to re-float GM, as the biggest US automaker sought to repay its debt to the government, which bailed it out from bankruptcy during the financial crisis.
An IPO will allow the Treasury to begin offloading the 61 percent stake it holds in GM after last year’s US$50 billion bailout of the Detroit-based carmaker.
GM said the public share offering would include preferred shares as well as common stock.
However, the Treasury said the offering would not include US$2.1 billion in preferred GM shares that it owned, which are in addition to the common shares representing the 61 percent stake.
The timing of the offering “suits the government and it suits GM,” said Kenneth Elias, a partner at auto sector analysts Maryann Keller & Associates.
Others warned, however, that GM’s announcement had been “rushed,” and cautioned an undersubscribed offering could be politically harmful for Obama and dent confidence in the automaker’s recovery.
GM chief executive Ed Whitacre, picked by the Obama administration to lead the troubled company through reform, announced on Thursday last week he was stepping down next month, naming board member Dan Akerson as his successor.
Although the announcement caught experts and some GM officials by surprise, it was seen as another sign of the car manufacturer’s desire to shed its old skin and free itself from government control.
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