General Motors Company filed for a public offering that will be amongst the largest IPOs in history. The IPO lays the framework for the U.S. government to depart ways with the auto industry.
General Motors did not disclose specifics regarding the shares of both common and preferred stock. The anticipated price range was not available. The company did say that after the offering there would be 500 million shares outstanding.
The U.S. Treasury will sell some of its holdings. The company is expecting to increase revenue by $16 billion. General Motors is planning to trade under the same symbol of “GM” as it was before the bankruptcy filing. This time however, GM has opted not to pay dividends on common shares.
The United States Treasury has established themselves as the selling shareholders of the common stock. In addition, they retain the right to make a decision on what level to participate in this offering. Currently The Treasury holds a 61% stake in GM in addition to $2.1 billion of Series A preferred stock. During the economic crisis, GM was among several corporations that received financial boost assistance. The Treasury invested about $50 billion to keep the company alive.
The Detroit based company has repaid nearly $7 billion this year alone. However, to repay the loans completely the public offering likely has to spur about $70 billion.
“There is no doubt in my mind that we will see the administration patting itself on the back, congratulating itself, telling the public that the investment into the automakers was a good idea,” WallStreet.com’s Silver said.
A successful public offering for General Motors would prove to be great news for the Obama Administration. His administration has maintained that the auto-industry bailouts were a necessary investment for the American people.