We want the government out, period. We don’t want to be known as Government Motors.
GM Chairman and CEO Ed Whitacre channels his inner Rick “Bankruptcy is not an option” Wagoner in the New York Times, telling the taxpayers who put him in charge of a bailout-rinsed General Motors to get lost. Sure Ed, we’ll all go NSFW ourselves just as soon as we get our $49.5 billion back. Talk about putting the throat-clearing guttural in chutzpah…
But Big Ed wasn’t messing around, he was actually asking Treasury to just sell all its shares during GM’s forthcoming IPO. According to the NYT’s Nick Bunkley, Whitacre apparently believes that having 60 percent of the company sold at the initial offering
would be good for employee morale and would improve G.M.’s image.
I get it. The Government Motors jokes start getting old by the fourth hole, and you’re getting the cold shoulder at the country club. But what’s worse, being owned by the government or asking taxpayers to screw themselves by throwing all of their equity onto the IPO roulette wheel?
Either way, it’s not exactly Whitcare’s call. The Treasury tells the Times that
G.M. would control the timing of the offering but that the Treasury would “retain the right, at all times, to decide whether and at what level to participate in the offering, should it occur.”
Meanwhile, the government has given no indication thus far that it plans on selling its entire stake. As recently as July 5th, and as long ago as last November, administration officials have been indicating that the government’s participation in GM’s IPO would be limited to about the amount of equity needed to lose its controlling stake. Which means GM is having to pitch a large-scale sell-off.
Privately, G.M. executives say that underwriters and banks are reporting a great deal of interest from hedge funds and big money managers. Mr. Whitacre said Thursday that he thought “the appetite is going to be big” for G.M. stock and that the I.P.O. could be the largest in United States history, topping Visa’s.
But don’t worry…
“We’re trying to not tie it to any elections or anything like that, truly,” Mr. Whitacre said at the Center for Automotive Research’s annual Management Briefing Seminars. “We just want it to be right.”
You know, special. A defining moment that says “GM is a regular, old-fashioned American company again.” But the last time Ed Whitacre tried to engineer one of those, it simply blew up in his face. How big of a taxpayer shafting is Whitacre willing to risk in order to improve morale around the RenCen, and stop all those cruel Government Motors jokes?
Whitacre has been bragging about GM’s still-unreleased Q2 financial results, and clearly GM’s forthcoming $5b credit line has inspired him to feel more independent of the government paymasters (although he tells the DetN that “We’d take more [debt] if we could get it”). Whitacre has also been talking up his role in GM product planning, as BusinessWeek‘s David Welch reports that GM has plans for
small, youth-oriented cars for Chevrolet and a large prestige sedan for Cadillac, as well as the minivan and midsize pickup
But are these, along with the rumored Buick flagship and revived mid-engine Corvette speculation just part of a pre-IPO pony show that’s included President Obama’s recent auto-bailout Mission Accomplished tour? Given that Whitacre admits he’s (still) “not a car guy,” we have to guess so.
Should taxpayers buy the hype and put all their chips on an initial offering? Given that the UAW VEBA account and the Canadian and Ontario governments want out of GM as well, we’d have to argue that going all in on that big of an IPO poses huge risks. But then, the Obama administration isn’t balancing risks against reward… it’s making a political calculation. A full government exit at IPO would be good for GM and good for Democrats in the upcoming midterms… and the whole multi-billion dollar loss might just be lost in the celebration. Wouldn’t that be nice.