General Motors took a big step toward repaying a controversial taxpayer-funded bailout by declaring plans for a landmark stock offering that represents a critical test for the Obama administration. The automaker said it planned to list the shares on the New York Stock Exchange and the Toronto Stock Exchange in an initial public offering that comes amid a still-weak global market for cars that is vulnerable to a further downturn.
Morgan Stanley,JPMorgan,Bank of America Merrill Lynch and Citigroup have been selected as the lead underwriters for what is expected to mark one of the biggest global IPOs.
The long-running confidential preparations for the IPO were dubbed Project Dawn by the group of bankers,Treasury officials and GM executives led by CFO Chris Liddell.
GMs initial filing with US securities regulators did not say how many shares would be sold or give an expected price range for the IPO. The IPO could raise up to $20 billion,though analysts cautioned that its size depends on still-untested investor demand for a restructured automaker with only two consecutive quarters of profits.
I dont think this is a good time to be going public, said Dennis Virag,president of Automotive Consulting Group. Its more political than practical.
Trading in GM shares is expected to start between late October and the US Thanksgiving holiday on November 25,according to people involved in the process. A stock offering in late October would mean trading would start just before the November congressional elections. Government officials and GM executives have repeatedly denied any link with the elections.
The Obama administration wants to be able to cast the $50-billion GM bailout as a financial success in the face of public skepticism and Republican opposition. GM is expected to return to the NYSE under the GM ticker symbol it had before the government-funded bankruptcy. Adding a stock listing in Toronto underscores the role the governments of Canada and Ontario played as junior partners to the US Treasury in keeping GM from liquidation. GM chief executive Ed Whitacre has said the automaker needs to distance itself from government ownership and the label Government Motors to build momentum in its turnaround.