GM to Attempt July 2010 IPO

by Edward Niedermeyer

Published: August 8th, 2009

The New York Times reports that GM will offer 2.5 billion shares of common stock in July 2010, just a year after emerging from government-backed bankruptcy. The news comes from regulatory filings in which GM says it will also begin sharing financial data after the third quarter. The Wall Street Journal voices serious doubts as to whether GM is ready for such an offering, pointing to its weak showing in the current cash-for-clunkers bonanza, falling sales, and product weakness. Meanwhile, PTFOA chair Ron Bloom tells the NYT that a Chrysler IPO is further off. “I don’t think Chrysler’s IPO is a 2010 event,” Mr. Bloom said at the Center For Automotive Research’s conference in Traverse City. “I think it’s a little further off. But again, that will be the board’s judgment.”

When asked to elaborate, Mr Bloom said “the definition of ‘practicable’ is a bit like ‘pornography,’ though; we’ll know it when we see it.” Though Bloom clearly wants to extricate the US government from its underperforming investment (to put it politely), he knows simply dumping the stock would destroy what little value remains in Chrysler or GM. “We would be looking to sell sooner rather than later,” he said. “But we’re not going to be foolish. We’re not going to dump the stock tomorrow. There is no practical way to exit an investment of this size in one fell swoop.”

Edward Niedermeyer

More by Edward Niedermeyer

Comments

Join the conversation

4 of 40 comments

Wolven on Aug 10, 2009

How many more Billions will the [s]stupid taxpayers[/s] good old guv have to give to get the banks to buy up the IPO shares? Or will the control they've gained with the previous Billions be enough to force those banks to "buy" in?

Like Reply
Geeber on Aug 10, 2009
pch101: I personally won’t be one of them, barring some significant changes in the management and product lineup between now and then, but I can tell you that I will very happy if an IPO raises enough cash to repay our tax dollars. This is what worries me more than anything else. Unlike many posters, I had no problem with President Obama giving Rick Wagoner his walking papers and the oversight team pushing the shutdown of Pontiac. But he replaced Wagoner with...GM-lifer Fritz Henderson. Now even that TTAC favorite, Bob Lutz, is back on board. Then we discover that the next top-of-the-line Cadillac may be...based on a front-wheel-drive platform shared with Chevrolet. Maybe Cadillac can call it the "Cimarron." But there are lots of neat GM concepts ready for the show circuit - just as there have been for every auto show season since 1999. Didn't do the corporation much good, in the long run. It isn't just rabid Obama-bashers who are reluctant to invest hard-earned money in that enterprise. The "new" GM smells a lot like the "old" GM.

Like Reply
Pch101 on Aug 10, 2009
The “new” GM smells a lot like the “old” GM. Regardless of what you or I think, I'm reasonably confident that Wall Street won't think of it this way. Most of us who are well versed on this topic know that this was a management problem that drove a product problem. But the typical Wall Street view is that this was primarily a cost problem, which was largely created by labor and "legacy". The Street actually liked Wagoner, believe it or not. Unlike us, they thought that he was fine, with his focus on cost management and negotiating union concessions. They'll think that the cost reductions created by the bankruptcy will do the trick. Of course, this is wrong. But they'll be the ones who end up supporting the IPO, so let's keep this secret between us, OK?

Like Reply
Geeber on Aug 10, 2009
Pch101: The Street actually liked Wagoner, believe it or not. This, to me, is the most mind-boggling part. Pch101: But they’ll be the ones who end up supporting the IPO, so let’s keep this secret between us, OK? If they enable GM to pay back the government, that is fine with me. Meanwhile, we'll most likely replace our Ford and Honda with...another Ford and Honda. That's our "vote" on the whole matter. Not because of ideology, or anger at the union (after all, Ford is unionized), or because we are against bailouts. I just don't see anything all that attractive - that we can actually afford - coming from the "new" GM in the next 1-2 years.

Like Reply