GM IPO: Go Ask Opel (Or Daewoo)

With news that GM’s IPO price could be headed as high as $33/share (only $10.67 more per share to taxpayer payback!), boosting the offering to some $12b, some might think that the decks have been cleared of skeptics. Not so. Though GM has emphasized its international flavor during its IPO pitch, it’s stayed away from the fact that its overseas operations haven’t been immune to trouble. Take Opel (please). Though invaluable as a development center for GM’s upscale global products, Opel is miles of bad road away from actual profitability. Just ask the guy who tried to buy Opel back when the General was trying to fire-sale its European operations.There is a lot of euphoria about the IPO, but if you dig into the numbers, they still have a problem in Europe. They are doing worse than when we looked at them two years ago, and it’s going to take a lot of cash to fix Opel. That’s my concern on the IPO.And Thomas Stallkamp of Ripplewood Holdings was telling Automotive News [sub] the dirty truth: without Opel, GM would be rich. Concerns over Opel have figured heavily into pre-IPO speculation, but unlike most commentators, Stallkamp has had a look under the Opel skirts. And speaking of peeks under skirts, nobody really knows exactly what’s going on over at Daewoo either. Daewoo’s boss calls operational profit this year “solid” but the real results will be lost in the GMIO accounting shuffle which lumps Korean results with Chinese and even African results. Meanwhile, creditors keep rolling over a cool billion ($1.02b) in Daewoo’s maturing debt month-to-month, presumably to keep from having to send a collections letter to the US Treasury Department.GM just pumped $413m into its Korean branch last October, and even now it’s preparing to take on another billion in debt from its pushy creditor, the Korean Development Bank. And no wonder: Daewoo builds one out of every four Chevrolets sold worldwide, and develops and designs everything from the Cruze and the Aveo to the interior for at least one GMC pickup.But how long that cash infusion will keep Daewoo’s creditors from the door isn’t clear. Both Opel and Daewoo likely need billions of dollars to sustain the hugely important roles they play in GM’s global product strategy, and it’s fascinating that GM has chosen not to address them prior to an IPO. But then, the crowds of clamoring investors seem to prove that this was the right choice.