Ever since the government bailout of the auto industry, investors and politicians alike have wondered when General Motors would be making a public offering of stock, and how the GM IPO would look to investors. Well, we don't have to wait any longer. GM has announced that it plans to file close to a $20 billion initial public offering (IPO) in early November. This puts the company well on the road to cut itself from federal government support. Analysts had thought that GM would hold several offerings over time, but company chairman and CEO, Ed Whitacre, said at an auto conference recently that it intends to "roll it out there all at once." Whitacre has also said that he wants the government out of GM's affairs.
The federal government, specifically the Treasury Department, owns about 61 percent of GM stock which it got as a result of the bailout. Reports are that the department plans to sell about 20 percent to 24 percent of its holdings, a portion which is said to be worth $10 billion to $12 billion.
Besides the U.S. government, the Canadian and Ontario governments as well as the United Auto Workers healthcare trust own shares of GM. They too got their shares as a result of the bailout and GM's bankruptcy. Canada and Ontario, which own 11.7 percent of GM, will sell 20 percent of its stake, reports say. The union's healthcare trust owns 17.5 percent.
GM is also said to be negotiating with banks for a credit line worth $5 billion. There is also talk that the company will start up shut down plants to meet higher demand. There are reports that GM has placed closed factories in Tennessee and Wisconsin on "standby."
It is said that the revenue from the sale of IPOs will assist GM to pay back debt and fund its pension liabilities.
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