One might imagine that GM wouldn’t want to scare anyone away from its forthcoming IPO, but triskadecaphobes might just want to sit this one out. With a $5b credit line reportedly secured from a group of “at least 15” banks, Reuters [via Automotive News [sub]] reports that GM could file its S1 with the SEC as soon as tomorrow. In case that date is too pregnant with superstition, GM could wait until next Monday to file paperwork. Either way, GM is expected to go public by the Thanksgiving holiday.
Sources tell Bloomberg that GM is aiming for a $12b-$16b IPO, in which the US government would sell about a fifth of its 61 percent stake in GM. That would be enough to reduce the government stake to below 50 percent, but it points away from the full divestiture that Chairman/CEO Ed Whitacre called for just last week. The Canadian government and the UAW VEBA fund have not decided whether they will participate in the IPO, but GM could sell some new shares as well. Bloomberg notes, however, that the exact size of GM’s IPO may not even be detailed in the upcoming S1 filing.
How much money the government will get out of the IPO is another huge question mark. And a lot of that could depend on the deal’s structure, specifically whether GM asks banks to “book build” the IPO by setting a price and marketing the stock to investors, or if a Dutch Auction will be used to set initial pricing. Auto Task Force boss Ron Bloom refuses to reveal details, telling Reuters
We have not yet determined what the exact (deal) structure will be. That will be certainly something we and the company discuss extensively in the period ahead. We are aware of those concerns that have been raised and we’re certain that this IPO … will be done in a fair way
Though Bloom’s insistence on “fairness” indicates a Dutch Auction, there’s still no way of knowing exactly how the offering will be structured.
Meanwhile, questions over Ed Whitacre’s mid-IPO transition out of leadership and the capability of his successor Dan Akerson will be a major concern for investors, who are already being asked to take a risk on GM. It seems unlikely at this point that Akerson will depart noticeably from Whitacre’s strategy, but as longer-term questions arise, his lack of experience in the auto industry could become a liability for GM. As one analyst puts it
With the government’s involvement and the extremely unusual bankruptcy that it went through, there are a number of stakeholders who have very conflicting interests. They need to be very clear about what the plans are for the company and who is going to be making the decisions
Given GM’s poor track record, and the environment of macroeconomic insecurity, addressing these concerns will not be easy. Especially if it becomes obvious that GM will not be able to repay the taxpayer bailout.