General Motors (GM), the new auto maker majority-owned by the US Treasury, said it intends to make an initial public offering (IPO) of stock by July 10, 2010, the first anniversary of its exit from bankruptcy.
The target date range for an IPO was given in a US regulatory filing yesterday. GM and its government owners will take “reasonable best efforts” to sell shares within a year, dependent on market conditions, according to the filing.
“That would be the very earliest they could do it,” said Erich Merkle, president of Grand Rapids, Michigan-based consulting firm Autoconomy. “A lot of it’s going to depend on where auto sales are and how many vehicles GM is producing.”
GM’s filing narrowed the timetable for a stock sale, after the Detroit-based company had said only that it was aiming for an IPO in 2010. Ron Bloom, the Treasury’s chief auto adviser, told reporters at an industry conference on August 5 that he expected a sale by GM next year.
GM hasn’t specified how the proceeds from the IPO would be utilised, said Renee Rashid-Merem, a spokeswoman. The auto maker filed for Chapter 11 bankruptcy on June 1 with $65 billion in US aid.
While GM is now closely held, it will start releasing financial results after the third quarter, Rashid-Merem said. Yesterday’s filing summarised GM’s activities in the four weeks since leaving court protection, without financial data.
‘Remain transparent’
The “disclosures are consistent with our commitment to remain transparent and to keep the public informed of our progress,” Chief Executive Officer Fritz Henderson said in a statement.
The Treasury owns 60.8 per cent of GM, the successor to the former General Motors Corp. The other stakes are 17.5 per cent for a trust for United Auto Workers’ retiree medical bills; 11.7 per cent for the Canadian and Ontario governments; and 10 per cent for Motors Liquidation, as the remnants of the old GM are now known.
Chrysler Group, which also reorganised in bankruptcy court with US aid, probably won’t have an IPO until 2011 or later, Treasury adviser Bloom said this week at the auto conference.
GM said it was authorised to issue 2.5 billion shares of common stock. “Only a portion of them would likely be issued if an IPO is launched,” Rashid-Merem said.
GM slid into bankruptcy after losses of $88 billion since 2004, when the company last posted an annual profit. Henderson is facing a streak of monthly sales declines at the biggest US auto maker dating to October 2007.
Volt technology
The Chevrolet Volt plug-in electric sedan, featured in GM’s marketing as one of the models that will help revive the company, “has not yet proven to be commercially viable,” according to the filing.
The technology required to power the car may not be developed in time for its planned November 2010 debut, the auto maker said.
“Our competitors and others are pursuing similar technologies and other competing technologies, in some cases with more money available,” GM said. “There can be no assurance that they will not acquire similar or superior technologies sooner than we do.”
GM also said it might not receive loans being sought from the US Department of Energy to help fund advanced-technology vehicles.
The auto maker said it applied three times and hasn’t received funding from the $25 billion program.
A fourth application will be made this month, said GM, which has based its business plan on winning $5.7 billion of such funding.
