Government could seek foreign investors for GM
DETROIT – Investment bankers handling the upcoming General Motors Co.
stock sale are expected to court foreign investors as well as those in
North America, according to a U.S. Treasury Department statement.
GM and the Treasury Department would not comment Sunday on reports that
the automaker is in talks with its current partner in China, SAIC, about
buying a stake in the Detroit company. SAIC is owned by the Chinese
The Treasury Department, in a statement issued late Friday, said
investors in GM would be sought across "multiple geographies," with a
focus on North America.
The U.S. Treasury loaned GM about $50 billion to help it through
bankruptcy protection last year. GM has repaid $6.7 billion. The rest of
the bailout money was converted to a 61 percent government stake in the
The government hopes to get the remaining $43 billion back with stock
sales that could start in mid-November.
Foreign investment in U.S. automakers and other companies is common.
Before the stock sale, GM will put on a two-week "road show" of
presentations for investors, and several stops are expected to be in
cities outside the U.S.
The Treasury statement also said banks underwriting the GM stock sale
will be expected to balance getting the maximum price per share and
return for taxpayers with having a stable base of shareholders and
keeping up interest in several sales that will occur after the initial
Individual investors will get "ample opportunity" to buy GM shares, but
institutional investors such as mutual funds, hedge funds and pension
funds will be sought out, the statement said.
"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 statement said.
The government will make ensure general guidelines are followed in the
sale "but will not involve itself in decisions regarding allocation of
shares to specific buyers," the statement said.
Last week, new GM CEO Daniel Akerson said it will take a couple years
for the government to get its money back, but GM has a goal of returning
Akerson, a former telecommunications industry executive who took over
from Ed Whitacre Sept. 1, said the government bailout saved a lot of
jobs at GM and helped to preserve the U.S. manufacturing base.
The bailout has bred resentment with some car buyers and hurt GM's
sales, however. The automaker hopes the stock sale will end its
government ownership and raise money for investment and to reduce debt.
GM filed paperwork in August starting the process to sell stock to the
Akerson indicated that it would take consistent earnings from GM and
several stock sales before the money is returned.
President Obama also has said all taxpayer money will be returned, but
spokesmen later said he meant the money his administration pumped into
GM, not bailouts made by the Bush Administration.
GM made $2.2 billion in the first half of the year, a strong sign to
investors that it is much leaner and healthier than it was before
bankruptcy, when it was losing billions.
The company will not sell any shares of common stock, leaving that to
the government and its three other shareholders. But it plans to sell
preferred stock, which pays a dividend and will be converted to common
shares in 2013.
Chrysler's top executive, CEO Sergio Marchionne, said last week he
expects Chrysler's IPO to take place in the second half of next year.
Chrysler got $12.5 billion in bailout money from the government in
exchange for $7.1 billion in loans and a 9.9 percent ownership stake.
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