GM Files for Initial Public Offering; No Price or Number of Shares Revealed
By Michelle Krebs August 18, 2010
General Motors has filed the documents for its highly anticipated Initial Public Offering of stock that would reduce the U.S. government's stake in the automaker.
The filing of more than 700 pages with the Securities and Exchange Commision (SEC) on Wednesday reveals few details about the offering itself. It does not say when the shares will go on sale, though it is believed it will be November or December. It does not provide a price range for the common and preferred shares, the number of shares in the offering nor the dollar value of the proceeds from the sale. GM said those will be determined by market conditions at the time of the sale, which also was not revealed.
It is believed the offering could be the nation's second-largest IPO in history. It is speculated it could raise as much as $16 billion; only Visa's IPO of $19.7 billion was larger.
The U.S. Treasury will sell some of its shares, the filing said. The amount the government will sell was not stated, but it is believed the government's stake would fall to under 50 percent of all GM stock. The U.S. government gained its majority stake in GM by providing $50 billion in taxpayer money to get the automaker out of bankruptcy last summer.
Despite the lowered stake, the government would still effectively control GM as any shareholed with that large of a position would.
One of the many risk factors listed in the filing is the "lack of familiarity" with the new CEO and the relatively new CFO of GM.
Current CEO and Chairman Ed Whitacre abruptly announced last week during GM's second-quarter earnings call with media and analysts that he would step down as CEO on Sept. 1 and relinquish his chairman title in December. He is being replaced with GM board member Daniel Akerson, who, like Whitacre, came up through the ranks of the telecommunications industry. CFO Chris Liddell was recruited from Microsoft earlier this year.
The prospectus warns that Akerson and Liddell are auto industry outsiders.
The offering of common stock will not generate new cash for GM. However, the Series B preferred shares will raise funds, given market conditions. GM said the money would go to the general purpose fund to run the company.
Shareholders will not receive dividends until the board of directors determines such a payout and when dividends are issued, preferred shares will receive the first payouts.
Doron Levin is an Edmunds AutoObserver.com contributing writer.
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