GM's IPO may be toned down

GM's IPO may be toned down http://tinyurl.com/2akd2no
All of automaker's stock may not be sold in the initial offering Christina Rogers and David Shepardson / The Detroit News
General Motors Co. appears to be tamping down expectations for the size of its initial public stock offering, expected this fall.
"I don't think that's going to be done in one fell swoop," GM's new CEO, Daniel Akerson, said this week.
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That's a break from comments made last month by his predecessor and GM board Chairman Edward E. Whitacre Jr., who suggested the government could sell its 61 percent stake in the Detroit automaker all at once.
The Obama administration hasn't decided how many shares it will sell, but insiders say it has not agreed to an overall offering in the $10 billion to $16 billion range that has been floated in numerous reports over the past six weeks.
The offering could be less than $10 billion if the government isn't satisfied with the price it will get, people briefed on the matters said.
The number of shares isn't the only question mark for the GM stock sale. The date and stock price, for example, have not been determined.
GM is in a so-called "quiet period" preceding its IPO, meaning federal regulations prohibit its officials from publicly discussing the stock sale.
Sources have told The Detroit News, however, that the automaker is aiming for a sales date after the Nov. 2 mid-term congressional elections.
"There are a lot of factors at work in terms of the timing of the IPO," said Rebecca Lindland, an analyst at IHS Automotive.
"There is no doubt some political pressure."
Late Friday, the Treasury Department said it wouldn't seek special deals with large investors to buy big chunks of its stake. It also pledged to ensure that retail investors get a fair crack at buying GM stock.
But it will only set broad principles for the underwriters who will be administering the sale, and won't dictate specific decisions to sell to specific investors.
"We expect that potential investors will be sought across multiple geographies with a focus on North American investors," the Treasury said in a statement.
"We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or unusual treatment."
The Treasury Department is eager to sell its 304 million shares and repay taxpayers as much of the $49.5 billion federal bailout as possible.
But the IPO market has been weak in 2010. Furthermore, the lingering recession and soft consumer spending continue to be a drag on new car sales.
It will be up to Akerson and a team of GM executives to sell the company to investors. They will embark on a worldwide tour to tout the company's comeback prospects.
GM and its underwriters have privately predicted the government will incur a loss on its initial sale.
And Akerson said this week it could take several years for the government to sell off its holdings in the Detroit-based automaker. The government will have to wait six months between major sales.
Among the other IPO details that are beginning to emerge, GM plans to split the shares, to make the per-share price more appealing to small investors.
A 4-for-1 split would allow individual shares to be priced between $20 and $35. GM will discount stock
GM and its underwriters also will decide how much to discount the stock in its initial sale, a practice common in IPOs. Typically, the share price is marked down, to give investors an extra incentive for taking on the risk of buying a new stock.
"The real question now for GM is how much to discount the initial offering," said a person familiar with the situation.
The Treasury Department would need to get an average of $131 for an unsplit share, over multiple rounds of stock sales, to fully repay taxpayers. The U.S. government isn't the only stakeholder with unresolved IPO issues. The Canadian government, the United Auto Workers health care trust and former GM bondholders also hold stakes, and they haven't yet disclosed how much they intend to offer for sale.
In addition, GM will sell up to 640 million preferred shares, which would be converted to common stock by 2013 -- a move to raise up to $3 billion in additional capital.
That would be in addition to common shares sold by the Treasury and perhaps the other stakeholders. GM said to be 'tough sell'
In the weak IPO market, and with car sales still struggling, GM is "going to be a very tough sell," said Scott Sweet, a senior partner of IPO Boutique in Tampa.
Twenty-nine companies that had scheduled IPOs have withdrawn or postponed them due to a lack of interest, Sweet said.
Just because GM's earnings have been promising for two consecutive quarters "does not mean the company is the next Google," he said.
Sweet notes that GM has had market troubles in Europe, its pension obligations remain high, and it faces emerging small-car competition in the growing markets of India and China.
If the third-quarter results are poor, "it will likely delay the IPO," Sweet said.
Lindland, of IHS Automotive, disagrees. She believes that while investors will pay close attention GM's third-quarter earnings, a weak quarter isn't likely to delay its IPO.
GM, she said, has done a good job of prepping investors for lackluster results this fall. "So much about Wall Street is managing their expectation."
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Best way is to send 30 shares of value $1 to each person in the US in the mail because they have already paid for the company total value $9.000.000.000
They can then try to sell it if they want.
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On 9/18/2010 6:34 AM, Bjorn wrote:

Strangely enough, it might be the best way to do it. But I would modify it. Add up how much taxes you have actually paid in the last 3 years, you get 1 GM share for each $250 taxes paid up to 300 shares max per person.
Most will sell inside of 3 months. But it solves the release and equitably to the people who ae paying for it.
It would be unfair to give shares to a 25 year welfare veteran or underground economy drug addicts.
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You would would want to create a control system so a person would not receive $30 worth - nominal - of shares?
Who is to say they could even sell them for $30?
I guess not many people would be able to get the nominal value trying to sell.
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If anyone offers less than the set bid price you will not be able to purchase any of the shares, period.
wrote:

You would would want to create a control system so a person would not receive $30 worth - nominal - of shares?
Who is to say they could even sell them for $30?
I guess not many people would be able to get the nominal value trying to sell.
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Not to worry they will not be offering shares to just anyone, just the highest bidders.
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Which is why it is being delayed, shortage of bidders that will offer more than peanuts.
On 9/18/2010 3:39 PM, Mike wrote:

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One again our friend Canuck57 is telling us the sky is falling LOL
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Individuals rarely get a chance to buy a new issue since the institutional investors normally will bid the price up and buy far more shares
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On 9/18/2010 4:50 AM, Jim_Higgins wrote:

Nice way to say they can't find enough buyers that want to take on a high risk position in GM.
Also, when the did the books, they couldn't figure out how to cook them to make GM look viable.
The depression is still running its course.
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Generally those with a new offering apply for a large number than they expect to sell. The reason there is a cost associated with the offering. By getting permission for a larger numbed makes it unnecessary to pay the cost a second time for another issue since they can sell the balance later at no extra cost.

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Fancy speak for every dollar put on the taxpayers credit card, be lucky if 3 cents comes back.
On 18/09/2010 3:34 PM, Mike wrote:

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Once again our friend Canuck57 is telling us the sky is falling LOL

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