NEW YORK, Aug 18, 2010 (AFP) - US auto giant General Motors on Wednesday took the first step to selling shares to the public, seeking to free itself from government control after pulling back from the abyss of bankruptcy.
Filing for what may be one of world's largest initial public offerings (IPO) of shares, GM did not disclose the number of stocks that will be offered or the price range.
|US President Barack Obama drives a 2011 Chevrolet Volt electric vehicle off the line with Plant Manager Teri Quigley at the General Motors Detroit-Hamtramck Assembly Plant in July. AFP file|
But the market expects GM to raise between 12 and 16 billion dollars, with the potential to be the second largest IPO in US history, after the credit card giant Visa, which raised more than 19 billion dollars in March 2008.
The landmark step also bodes well for President Barack Obama as it offers the American public some hard evidence for the success of his economic policies to pull the country out of its worst economic crisis in decades.
Senator Carl Levin of Michigan, a Democrat, called it "another important step in GM's rebound and in the recovery of the domestic auto industry.
"A successful IPO will be even more evidence that the steps the government took in 2008 and 2009 were good for workers, good for Michigan and good for the nation," he said.
In the filing Wednesday with the US Securities and Exchange Commission, GM said it planned to apply for listings on the New York Stock Exchange and the Toronto Stock Exchange.
"The amount of securities offered will be determined by market conditions and other factors at the time of the offering," GM said in a statement.
"The number of shares to be offered and the price range for the offering have not yet been determined," it added.
The stock sale is expected to take place late this year and the company -- which was part of the prestigious Dow Jones Industrial Index from 1925 to 2008 -- will retrieve its old trading ticker symbol of GM.
The Treasury Department said separately it "will retain the right, at all times, to decide whether and at what level to participate in the offering."
The IPO filing came nearly a week after the company announced a 1.3 billion dollar quarterly profit, marking a second consecutive quarter with positive earnings.
Company executives have said for several months they were planning to re-float GM, as the biggest US automaker sought to repay its debt to the government, which bailed it out from bankruptcy during the financial crisis.
An IPO will allow the US Treasury to begin offloading the 61 percent stake it holds in GM after last year's 50 billion dollar US bailout of the Detroit-based carmaker.
GM said the public share offering would include preferred shares as well as common stock.
But the Treasury pointed out that the offering would not include 2.1 billion dollars in preferred GM shares that it owned, which are in addition to the common shares representing the 61 percent stake.
The bailout led to restructuring, mass layoffs, plant closures and billions of dollars in debt wiped out, but ultimately led GM into stability and profit.
For Obama, the IPO filing fits neatly into a campaign to persuade skeptical voters that massive government spending -- however loathsome -- kept US firms and the economy alive.
GM chief executive Ed Whitacre, picked by the Obama administration to lead the troubled company through reform, announced last Thursday he was stepping down next month, naming board member Dan Akerson as his successor.
Although the announcement caught experts and some GM officials by surprise, it was seen as yet another sign of the car manufacturer's desire to shed its old skin and free itself from government control.