Tags: General-Motors | IPO | GM

General Motors Said to Proceed With Plans Toward IPO Next Month

Friday, 15 Oct 2010 02:53 PM

General Motors Co. is pushing ahead with a plan to sell shares to the public next month and is slated to start meetings with investors after the November elections, said people with knowledge of the matter.

GM shares would probably be priced on Nov. 17 or Nov. 18 and begin trading the next day, said two of the people, who asked not to be identified because the plans are private. The Detroit-based automaker and the U.S. Treasury, which owns 61 percent of the company, don’t want the offering to slip beyond Nov. 19 into the U.S. Thanksgiving holiday week, they said.

GM executives and their bankers will begin a roadshow after the Nov. 2 election to present the offering in Europe and the U.S., the two said. The various teams would finish up in New York, after refining their sales pitch in smaller cities, a few days before the pricing, they said.

The schedule isn’t final and GM advisers have said the offering may benefit from a post-election stock market rally, they said. GM and the U.S. Treasury aim to hold an $8 billion to $10 billion IPO, said two of the people. It won’t be smaller than $6 billion, two people have said. The initial sale could be as large as $13 billion, one person said this week.

One concern of GM’s advisers is that October new-vehicle sales may come in lower than expected when they are reported the day before the mid-term elections.

Rising Sales

U.S. auto sales may reach a 12.3 million annual rate in October, the fastest pace this year, Don Esmond, Toyota Motor Corp.’s North American sales chief, said yesterday at an event in Detroit.

“The good news is last month was about 11.8 million,” Esmond said. “So far this month, knock on wood, it could go over 12.”

A $10 billion share sale by GM would be the biggest U.S. IPO since Visa Inc.’s $19.7 billion raised in March 2008. It would be the third-largest in the U.S., also trailing AT&T Wireless Group’s $10.6 billion offering in 2000.

A large GM offering at a lower share price would place more pressure on the government to win higher prices in future offerings, two people said. GM and its investment banks had considered a deal worth $12 billion to $16 billion, people familiar with the plans said in August.

For the U.S. to recoup its $50 billion investment in GM, it needs to sell at an average price, before splits, of $131 a share, said a person familiar with the matter. The stock will be split to sell at an initial price of around $20 a share, said that person and two others.

Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, put the breakeven figure at $133.78, before splits. While the U.S. bailout was paid for with TARP money, only a portion of the government’s stake will be sold in the initial offering.

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General Motors Co. is pushing ahead with a plan to sell shares to the public next month and is slated to start meetings with investors after the November elections, said people with knowledge of the matter.GM shares would probably be priced on Nov. 17 or Nov. 18 and begin...
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Friday, 15 Oct 2010 02:53 PM
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