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GM Plans to Pitch to Investors After Elections

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On: Fri, Sep 3, 2010 at 10:05AM | By: Sherry Christiansen

GM Plans to Pitch to Investors After Elections

Two sources have recently announced that the long awaited General Motors’ initial public offering is planned to price on November 17th and debut on the 18th of November. The dates are not set in stone and are subject to change, depending on the stock market.

GM plans to begin pitching its IPO to potential investors on November 3rd, after the congressional elections. Waiting until the end of the year allows the company to report profits from the last quarter, although GM has already forewarned that the second half of the year will show an expected decline in sales as compared to the first half.

This is perhaps one of the biggest initial public offerings in U.S. history (since 2008 when Visa’s IPO transpired), as GM has listed the company as being worth as much as $20 billion. Although the government has not yet announced how much of its GM stock will be sold, analysts are projecting that the common stock will sell for as much as $12-$16 billion with the preferred stock (that would convert to common stock under a mandatory provision) going for up to $4 billion.

The U.S. government invested $50 billion of taxpayer money into the automaker and subsequently owns a 61% stake. The stock offering will reduce the governments’ stake in the company, but no one knows for sure just how much.

Politically, the bailout has not been very popular with voters. If the IPO is not successful, the Republican party will use the information as leverage in the upcoming election in order to gain majority in the Senate and the House.

Although the success of the GM IPO could possibly sway voters one way or another, GM executives deny that the motivation of the timing of the initial public offering of the company was influenced by political motivation.

The Obama administration has promised to begin selling down its stake in GM as soon as possible and announced last year (when GM exited bankruptcy) that the process would begin in late 2010.

GM continues to wait for its S-1 filing submitted to the U.S. Securities and Exchange Commission (SEC) to be approved.

The Detroit automakers’ shares will be traded on the New York Stock Exchange as well as the Toronto Stock Exchange because the United States and Canadian Governments were both involved with the company’s bail out.


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