• Jul 24, 2010
A year ago, General Motors needed a $50 billion U.S. government bailout to stave off liquidation. One year later, the Detroit-based automaker is on the precipice of filing for one of the largest initial public offerings in American history. Automotive News quotes unnamed sources who claim GM will file with the Securities and Exchange Commission by August 16. These anonymous sources reportedly added that the goal is to complete the company's IPO before the November elections - unsurprising when you consider the highly-political nature of The General's current status (the federal government holds a 60.8% stake in the automaker).
Assuming GM files by August 16 as AN's sources allege, the move would come just days after the company's second-quarter earnings announcement. If that's indeed the case, we think GM plans to announce a sizable profit for the quarter that ended on June 30. After all, there's nothing more unattractive to investors than a fresh batch of red ink on the ledger.

[Source: Automotive News sub. req.]


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  • 23 Comments
      • 4 Years Ago
      "Unfortunately the changes weren't adequate at GM. They will file bankruptcy again and then never return to the private sector. Not my opinion but that of many analysts. They jettisoned a lot of debt and property but not nearly enough middle management, politically motivated, paper shufflers."

      100% CORRECT! The necessary change of culture, mindset or whatever you want to call it has not happened. Even before the IPO, GM shows little change from their old bad habits and methods. A good quarter before the IPO will simply fool the investors. GM's stock price will gradually fall again and it's debt will rise. Eventually it will file again and it's game over this time. Another possibility is that the Chinese will snap it up and move most of it over there. Either way GM as we know it is doomed.
        • 4 Years Ago
        In all of your posts since you started, 98% of your predictions and opinions were dead wrong. You must be a democrat politician.
      • 4 Years Ago
      The IPO resolves nothing. Absolutely nothing. The US and Canadian Governments have $50 billion invested in this mess and the UAW also has a sizeable portion. So allowing the public to come in and invest in this morass only screws them, not the other institutional investors.

      Here's why.

      Sometime after the IPO, one or all of these institutional investors (named above) will sell their stock. These portions are not small ones. The UAW will likely sell theirs first to get out of the deal - when granted stock swaps at Ford for portions of debt, the UAW bailed quickly. When huge portions of stock are sold off, this decreases the value of the other shares being held. Flooding the market with shares will necessarily make all the other held shares go down until such time as there are buyers who will take the risk of the purchase - and they'll do so at a very low price point. This will deflate the price of the shares. And with the institutionalized partners above being driven by politics, not profit, they have really no concern to the market impact overall. And while one would think that the idiot politicians who voted for this bailout would want the taxpayers' money back plus interest, these are the same idiot politicians who have never met a payroll, worked a real job, had to keep a business open, or have any clue as to market conditions and impacts. In order to get out of the taint of this pathetic bailout, these politicians would sell out at the earliest possible convenient time. This will flood the market with shares and would devalue all other buyers' shares.

      What Government Motors Company should have done is to take the $30 billion in cash they have (which is $30 billion of the $50 billion they were given) and give $20 billion back to the Government to reduce the obligation to the Government by that much and significantly reducing the potential impact of the Federal Government bailing out on the stock due to political pressures - this would have a psychological impact on potential buyers.

      Remember that GMC is going to have to sell enough stock to cover the $50 billion PLUS Canadian PLUS UAW portions AND then have set up a portion of shares for the public. This amount will be predicated on who is DUMB ENOUGH to buy GMC stock knowing that GM SCREWED EVERY SHAREHOLDER IT HAD BEFORE BANKRUPTCY that didn't bail on the company earlier. The more shares offered for sale, the less the stock is worth - and there is no clear indication if there are enough buyers who will buy enough shares to mitigate the impact of the Institutional holders (noted above) when they sell.

      Ford Motor Company's market capitalization right now as of Friday business closing at $43.3 billion. Ford traded at $12.72 at that closing for common stock. How can it be justified that GMC is worth significantly more than this - even if it was valued at $60 billion, that barely covers the already outstanding obligations of the Institutionalized buyers (noted above) - so selling more shares that that creates a company artificially valued (not dictated by market forces).

      Almost under ever scenario you can imagine, GMC stock is worthless and full of significant market losses to the public. NOT UNTIL THE GOVERNMENTS AND UNIONS DUMP THEIR SHARES is this stock a good buy. Not under any scenario. You will get burned and burned badly - all of the institutionalized holders right now have no market reason to make RATIONAL decisions. They have SIGNIFICANT external reasons to ditch the stock and flee. Don't think for a minute that the current U.S. Government which has mortgaged and leveraged our financial future with huge and consistent budget deficits without regard to efficiency of spending will have any more common sense when it comes to getting out from under GMC.

      YOU'VE BEEN WARNED.
      • 4 Years Ago
      Too early.
        • 4 Years Ago
        Agree, it seems like the economy is slowing down again. They should wait until 2011. No need to hurry.
        • 4 Years Ago
        Too early for GM, but its about politics. The 2010 midterm elections are coming up and politically the democrats need to show they know what they are doing with the bailouts.

        This is why the Americredit deal was rushed and sealed for $3.5B this week, there is rush to get out an IPO and lower the US government stake of GM below the 50% mark. Its expected the IPO will only allow 20% of the company to go public, and the Canadian government and UAW will sell of its shares as well. So there won't be a lot of the company public, but without an oversupply of stocks GM's stock price should stay fairly healthy and politicians can claim that big government knows how to handle private industry.

        If these politicians really cared about GM they would wait until the economy was better, the job situation was better, and the company had the wind to its back before they released an IPO.
      • 4 Years Ago
      Maybe I missed something?

      GM is already public. Maybe you guys meant this is a seasoned offering or a rights issue?
      • 4 Years Ago
      WOW! All these economic scholars commenting on what should be, what should have been, what will be........ Where were you all during the last 8 years or so? Why weren't you warning the country and Autoblog readers about the coming economic downturn?
        • 4 Years Ago
        I was busy, I had a job.
      • 4 Years Ago
      Government motors playing politics with Your tax money.
      Thank the democrats and their union king makers.
        • 4 Years Ago
        @ Rob, boy this is a new one. Did Bush tell GM to build Cobalt and Aztek?

        That tsunami happened while Bush was in office as well, is he to take a hit for that one?
        • 4 Years Ago
        @ Sea Urchin.
        Union power brokers deliver votes to the democratic party en mass.
        You're right about lawyers ,but I was referring to another form of corruption.
        • 4 Years Ago
        Unions are not their king makers.


        Lawyers are.
        • 4 Years Ago
        I guess you're stupid to realize that the auto industry collapsed under the Bush administration... Bush left it for Obama to fix. How would you have fixed the situation? Easy for some people to sit on their asses behind a keyboard and criticize someone for trying to fix a country that was given to him in tatters. Fact of the matter is Republicans are everything that is wrong with the USA.
      • 4 Years Ago
      The GM situation was well reported, the warnings were simply ignored. As for scholars, Economists deal with the economy, not the Financial Markets which is where the GM IPO will occur. My comments are on the A/B Story, feel free to ignore them this time around as well.
      • 4 Years Ago
      Heres my question, I own 3000 shares in MLQQ the goverment liquidated verson of GM. If it goes public, will my shares roll over to GM?
      • 4 Years Ago
      GM will have to offer it's IPO stock price around $15.00 per share if they expect to get any type of volume buying from the public. Then the stock will be heavily exposed in the media in an attempt to get more public buyers to drive up the price. Only after about one or two weeks of steady increases towards $20.00 per share will the UAW and Canada begin to rapidly sell their stocks. After that, the bottom will drop out if the public feels the fix is on, or the price will rise even further if the public feels that there is still some life in the stock.
      • 4 Years Ago
      UPSMANDan: Are you now arguing that GMC stock is a good buy? If so, I recommend that you buy a lot of it. People with a lot of conviction on a financial subject should put their money where there mouths are.

      The screwing of the GM Bondholders in favor of the UAW was incredible. I have not found anyone that predicted it. Do a search for yourself or have a look here:
      http://market-ticker.denninger.net/archives/1033-Holding-GM-Debt-Gubbermint-Is-Robbing-You!.html

      Personally, I won't invest any money (bonds or stocks) in a company with union workers while President Obama is in office. I expect that he will "stand with them" if trouble comes and I will get screwed.
      • 4 Years Ago
      Unfortunately the changes weren't adequate at GM. They will file bankruptcy again and then never return to the private sector. Not my opinion but that of many analysts. They jettisoned a lot of debt and property but not nearly enough middle management, politically motivated, paper shufflers.
        • 4 Years Ago
        @ Sea Urchin: One, the UAW's retiree hea;th care trust, the UAW VEBA (Voluntary Employee Benefits Association) owns a significant share of GM. Two, the National Labor Relations Act makes it impossible for an employer the size of GM to get rid of a union. Period. Threatening to move a plant if they, the union members, don't decertify the union, is blatantly illegal. No ands, ifs, or buts. Blatantly illegal.
        • 4 Years Ago
        GM can do something about UAW now while the memory of bankruptcy is on people's minds. Get rid of them as soon as possible and threaten to move plants and jobs south, where people want to work.
      • 4 Years Ago
      GM needs to get this done fast. Customers are not looking at GM because of the goverments role in them. If people want their money back, as so many post, dont boycot them. I had a GM retire tell me he wont buy from Gov. Motors even when his pension was most likey saved from the goverment bailout. Just like the Americredit deal GM was losing 9% of the market without a bank to finance highrisk. Things are looking good and I will be buying stock when it comes out.
        • 4 Years Ago
        What world do you live in? GM posts a meager 1st quarter profit and everyone jumps on the bandwagon wanting them to go public. GM goes public it will be the end of GM.
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