By on August 12, 2010

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.

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4 Comments on “GM Moving To File $12b-$16b IPO Paperwork On Friday The 13th?...”


  • avatar

    I continue to be boggled by the timing of this CEO succession. I was convinced that GM was really getting on track in the runup to the IPO, but this is a strange curve ball.

  • avatar
    Robert Schwartz

    “Bloomberg notes, however, that the exact size of GM’s IPO may not even be detailed in the upcoming S1 filing.”

    It would be unusual if it were. If this were an ordinary IPO, the SEC would spend a few weeks reading the filing, and then it would send the filer a letter — a very long letter — with its helpful, well thought-out comments* on how the document could be improved.

    A revised document is then filed along with a letter responding to the comments.

    The preliminary prospectus (a/k/a, the red-herring) is then printed and the deal is marketed.

    At then end of the marketing process, the final numbers are plugged in, the SEC declares the registration statement to be “effective”, the shares are sold and the final prospectus is printed and done.

    This deal will not be a dutch auction because the bankers will have to use tools of persuasion (threats from the Chicago mob in DC) to get the big pieces lined up and to whip the public into an insensate frenzy in which they will buy this crap.

    There will no doubt be absolutely unheard of turnaround time from the SEC, just like the bankruptcy proceedings.

    *Just kidding, the comments are bureaucratic nit-picking and blind bureaucratic incomprehension.

    • 0 avatar
      porschespeed

      @Robert Schwartz,

      Exactly.

      The semi-sad part will be that the fall will be taken by a bunch of nostalgic/poorly-educated/ retirees/chumps who can ill-afford the loss that they will take.

      Whichever ‘investment bank’ writes this pile of crap will walk away with massive profits, funded by a combination of those chumps, and the US taxpayer.

      (There are still idiots who are trading stock in ‘old GM’ regardless of he fact that it is utterly worthless and both GM and the SEC have sent out multiple notices to that fact.)

      It never ends…

  • avatar
    Robbie

    They got enough billions to be able to go on for a while; but what has truly structurally changed at GM? Why would anyone want to invest in GM?


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