Results 1 to 4 of 4

Thread: GM Goes Public With IPO

  1. #1
    Vulture of The Western World Eric's Avatar
    Join Date
    Jul 2006
    Location
    The Land of The Edentulites
    Posts
    22,741

    GM Goes Public With IPO

    DETROIT (Nov. 18) -- General Motors is returning to life as a public company Thursday with a stock offering worth potentially $23 billion, ending the government's role as majority shareholder and closing a remarkable chapter in American corporate history.

    The U.S. government should make about $13.6 billion when GM shares start trading on the New York Stock Exchange. The federal Treasury is unloading more than 400 million shares of GM, reducing its stake in the company from 61 percent to about 33 percent.

    The IPO could wind up as the largest in history. GM set a price of $33 per common share on Wednesday, a day after it raised the number of shares it will offer to satisfy investor demand. When the U.S. government and other owners sell their shares, they'll raise $18.2 billion. GM will raise another $5 billion by selling 100 million preferred shares at $50 each.

    Together, the sale of common and preferred stock will bring the deal's value to a record $23.2 billion.

    The stock offering is the latest in a series of head-spinning developments over the past two years for an American corporate icon.

    In September 2008, to mark its 100th birthday, the automaker celebrated in the grand three-story atrium on the ground floor of its Detroit headquarters.

    Two months later, then-CEO Rick Wagoner found himself in front of members of Congress, begging for money to keep GM alive. Four months after that, he was ousted by President Barack Obama.

    By June 2009, GM had filed for bankruptcy. It emerged relieved of most of its debt but mostly owned by the government and saddled with a damaging nickname: "Government Motors." The value of its old stock was wiped out, along with $27 billion in bond value.

    Now GM will become a publicly traded company again and revive the stock symbol "GM." Dan Akerson, GM's fourth CEO in two years, will ring the opening bell Thursday on the New York Stock Exchange, to celebrate the company's rebirth.

    Obama on Wednesday said GM's IPO marks a major milestone not only in the turnaround of the company, but of the U.S. auto industry as a whole.

    "Supporting the American auto industry required tough decisions and shared sacrifices, but it helped save jobs, rescue an industry at the heart of America's manufacturing sector, and make it more competitive for the future," he said.

    Most of the new stock will go to institutional investors, not to everyday investors, following a Wall Street system that rewards investment banks' big customers. GM will set aside 5 percent of its new stock for employees, retirees and car dealers to buy at the offering price. The deadline to sign up was Oct. 22, but the company has not revealed how many people took the offer.

    Early Thursday, GM's main joint venture partner in China, SAIC Motor Corp., said it has bought a nearly 1 percent stake in GM, buying shares being offered in the IPO at a total cost of nearly $500 million. The Shanghai-based, state-run SAIC said the share purchase is meant to enhance its cooperation with GM in China, the world's biggest auto market.

    Senior Obama administration officials said Wednesday that the Treasury Department sought to strike a balance between getting a return for taxpayers and exiting government ownership as soon as practical.

    The government has agreed that it will not sell shares outside the IPO for six months after the sale. The officials, who spoke on condition of anonymity, said they would assess their options for selling the government's stake further.

    In the stock offering, the government stands to make $13.6 billion if it sells 412 million shares, as planned, for $33 apiece. It will still have about 500 million shares, a one-third stake. It would have to sell those shares over the next two to three years at about $53 a share for taxpayers to come out even.

    The total bailout was $50 billion. GM has already paid or agreed to pay back $9.5 billion. That comes from cash and payments related to preferred stock held by the government.

    The GM debut comes at a time when auto stocks are performing well generally. The stock of GM's crosstown rival, Ford, has risen steadily this year, from about $10 in January to about $16.50 as the GM IPO approached. The stock traded for a dollar in November 2008, and Ford never even took bailout money.

    As for GM, whether bankruptcy actually fixed the company remains an open question. Before the crisis, it was saddled with debt and had a labor contract that called for paying workers even if they weren't working. Massive pension and health care costs kept GM's fixed costs high, and contracts with dealers meant it would be expensive to shut underperforming brands. Combined, those problems put the automaker in a topsy-turvy world where it made more sense to run plants at full bore, even if no one was buying cars.

    Bankruptcy fixed much of that. The company closed 14 of its 47 plants, shuttered or sold off its Hummer, Saturn, Saab and Pontiac brands, and slashed its debt from about $46 billion to about $8 billion. Union retiree health care costs are now the United Auto Workers' responsibility, and the controversial jobs program that paid idled workers almost a full salary has been eliminated.

    GM employs 209,000 people in the United States today, down from 324,000 in 2004. But it's making money. Before bankruptcy, GM lost about $4,000 per car. Now it makes about $2,000 each. GM says it is poised to earn about $19 billion a year when the car market rebounds.

    Still, questions remain. With this stock offering, GM doesn't rid itself of government intervention. The government remains a big shareholder.

    Financial problems that plagued the automaker for the past decade still don't seem under control: Despite hiring Chris Liddell, a new CFO from Microsoft known for fixing problems, GM says it's still not sure all the financial problems were fixed.

  2. #2
    Senior Member
    Join Date
    Jul 2006
    Location
    Minneapolis
    Posts
    1,429
    What about all the previous bond holders who got fu<ked?

    Oh yeah, that won't happen to these new investors.

  3. #3
    Staff
    Join Date
    Aug 2006
    Location
    Houston, TX
    Posts
    3,126
    I wish I would have bought stock in either company during the 2009 bailout period. I'd be able to retire today.

  4. #4
    Senior Member
    Join Date
    Jul 2006
    Location
    Raleigh NC, USA
    Posts
    3,628
    I wish I'd bought Ford when they were under two dollars. Now they're trading in the $15-16 range. I would have made a killing, but just didn't have the cash at the time.

    http://finance.yahoo.com/q?s=F&ql=1

    But...
    Take a look at this one. This is Tata Motors on the Bombay Stock Exchange. Their market cap is nearly 12 times higher. Don't know if that's because of currency exchange rates or speculation in India. But certainly interesting.

    http://finance.yahoo.com/q?s=TATAMOTORS.BO

    Chip H.

Similar Threads

  1. Public Service heroes - NOT!!!!!
    By Ken in forum Motor Mouth
    Replies: 3
    Last Post: 03-13-2011, 10:23 PM
  2. Went to look at Taurus Public Defender
    By Eric in forum Guns, Second Amendment
    Replies: 0
    Last Post: 08-15-2009, 07:48 AM
  3. Creepy robot to be shown to public
    By Eric in forum Motor Mouth
    Replies: 5
    Last Post: 02-02-2008, 06:40 PM
  4. Public Roads - Private Management?
    By swamprat in forum Fight Traffic Tickets/Driving Issues
    Replies: 3
    Last Post: 01-20-2008, 07:44 AM
  5. Why to teach the Bible in public school
    By mrblanche in forum Motor Mouth
    Replies: 6
    Last Post: 12-06-2006, 12:09 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •