GM to price shares at $26-$29

GM to price shares at $26-$29 http://tinyurl.com/2cbloyu
Washington General Motors Co. plans to sell up to $10.6 billion in stock in its initial public offering, a move that would leave the U.S.
government with less than a majority stake in the automaker, two people briefed on the matter said Monday.
GM plans to offer 365 million shares at $26 to $29, for a range of $9.5 billion to $10.6 billion. That would make the IPO one of the five largest in U.S. history.
The company will set the final price after gauging market demand during a two-week road show that will begin on Wednesday, the sources said.
GM is expected to outline the details of the offering as early as today in a filing with the Securities and Exchange Commission, the sources said.
Rebecca Lindland, an analyst with IHS Automotive in Lexington, Mass., called reducing the government's stake to a minority interest "symbolically important."
"This is an important first step at getting the taxpayers paid back, getting the government involvement to a minimum and showing that GM is on the right track. This is a company that everyone had written off a very short time ago."
The IPO is expected to get a final price on Nov. 17, with the stock expected to start trading on the New York Stock Exchange and the Toronto Stock Exchange the following day.
The Treasury Department, which swapped $40 billion in loans to GM for 61 percent majority ownership, plans to sell about $7 billion in common shares, reducing its stake to 43 percent, the sources said. The precise size of the government's stake won't be known until the IPO is completed but it could fall below 40 percent if other GM owners exercise their rights to acquire additional shares.
The Canadian and Ontario governments, which loaned GM $12 billion combined, plan to sell about $1 billion of their 11.7 percent stake, which will shrink to under 10 percent.
The United Auto Workers health care trust fund will sell about $2 billion of its stake, which will likely fall from 17.5 percent to 15 percent.
GM also plans to file to sell up to $3 billion in preferred stock, a move that will generate cash the automaker can use to pay off debt and shore up its underfunded pension. The preferred shares would convert to common stock.
The IPO, when it launches, will mark GM's return to the public markets 17 months after it exited bankruptcy as a new company under government ownership. It also gives the public, along with GM retirees, dealers and employees, a chance to invest in the automaker once again. IPO market rebounding
The public offering comes despite a struggling economy and a weak year for IPOs, though the IPO market has improved.
Since filing for the IPO in August, GM replaced its CEO with one of its board members, Dan Akerson, who has been working to sell the offering to investors. The company has been courting investors around the world to take part.
The government will lose money on its first sale, although it is not precisely clear how much.
Generally, stocks that go public are priced at a discount to woo investors and often appreciate by as much as 10 to 30 percent in early trading.
Determining the government's overall anticipated losses won't be possible until the stock starts trading.
Steven Rattner, the former Obama administration auto czar, said Monday the Treasury is looking at an overall recovery in the "low $40 billion range" of its $49.5 billion bailout of GM.
GM spokeswoman Noreen Pratscher declined to comment, as did the Treasury Department.
The Treasury Department holds 304 million of GM's 500 million common shares, but GM plans to split the shares, which ultimately will put significantly more shares into circulation.
The Treasury spurned efforts by GM's underwriters to sell a larger stake in its IPO and hopes to sell the rest of its stock at higher prices in a series of sales. The government may not be able to sell more stock for at least six months.
By the end of the year, GM will have repaid the Treasury $9.5 billion, leaving $40 billion outstanding on its bailout. That means it needs to get about $131 a share for its stock to break even before splits on average.
The sale is half as large as once predicted; some analysts had suggested GM's IPO could top Visa's, the largest ever at $19.7 billion U.S. But GM has already won support from four or five sovereign wealth funds, which are expected to announce they will buy up to $2 billion of the offering.
GM has taken other steps to improve its balance sheet, including paying its remaining $2.8 billion obligation to the UAW's health care trust fund seven years early, a move that will save the automaker $1.4 billion. The automaker also finalized a $5 billion line of credit.
Last week, GM said it would make at least $6 billion in cash and stock payments to its underfunded pension plans and pay the government $2.14 billion for preferred shares by December.
During bankruptcy, GM shed billions in debt, killed four of its eight brands, cut 25 percent of its dealer network and closed a dozen auto plants.
Now, the company, which lost $88 billion over a four-year-period, has earned $2.2 billion in the first half of the year and is poised to announce "significant" profits for the third quarter. Impact on GM board
Maryann Keller, a Stamford, Conn.-based auto industry consultant, said reducing the government's ownership stake below 50 percent could influence the composition of GM's board.
There could be an expansion of the board or a change in members, if majority ownership is truly in the hands of independent shareholders, said Keller, of Maryann Keller & Associates.
The Treasury appointed a majority of GM's current board. CEO Akerson and former CEO Ed Whitacre Jr., who remains chairman, are also government-appointed directors.
One party that won't be selling shares is the former GM's bondholders, who hold 10 percent of the new GM and warrants for another 15 percent.
That won't be resolved until old GM's reorganization plan is confirmed.
Scott Sweet, a senior managing partner of IPO Boutique in Tampa, noted GM still faces financial challenges including its pensions, underfunded by $27 billion worldwide, and troubles in the European market.
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Gm is doomed - again.
Interesting to see a zoombie die and die again and a again
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"Bjorn" wrote in message wrote:

Gm is doomed - again.
Interesting to see a zoombie die and die again and a again
What is a zoombie??? a toyota with a stuck throttle I guess
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Tom wrote:

Remember "Beep Beep"? A Little Nash Rambler stuck in 2nd gear :-)
http://lp2cd.com/time/50/50002.htm (click on the warp link)
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On 02/11/2010 6:13 AM, Jim_Higgins wrote:

Too risky for me. Might be some short term gains but count me out.
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