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Big Moves Ahead for GM

November 1, 2010
3 min to read


General Motors Co. will take major strides in the coming days in its 16-month march from bankruptcy to the New York Stock Exchange, reported The Detroit News.


Over the next week to 10 days, GM is expected to take three big steps: release third-quarter earnings, set a price range for its initial public stock offering, and embark on a global marketing push to court investors.

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GM's underwriters and the U.S. Treasury Department, which is the company's majority owner, may announce as early as Monday how many shares the government intends to sell in the IPO, as well as set a starting price range, The Detroit News has learned. A final share price will be set shortly before the company goes public with its stock, which is expected in mid-November.


The United Auto Workers' health care trust fund, which holds a 17.5 percent stake, also is expected to sell some of its shares, as are the Canadian and Ontario governments, which own 11.7 percent of GM, a source has told The Detroit News.


The automaker also expects to post its third consecutive quarterly profit this week or early next, building upon a $2.2 billion profit in the first half of the year -- showing "significant" results, a person briefed on the matter said.


Auto sales are looking up. GM and other automakers report U.S. sales for October on Wednesday with analysts predicting it could hit a seasonally adjusted annual rate of 12 million.


The gradual rebound of the market is good news for GM, which also working to improve its image. Consumer Reports recently moved the automaker up in its reliability rankings and some GM brands have successfully stolen market share away from rivals.

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"We are getting reward for it in the market place, not only in terms of popularity but price," CEO Daniel Akerson told reporters Friday. "We're very pleased with our position, right now."


A loss is expected for the Treasury in the initial sale, but the IPO will represent a major step for GM in ending the government's 61 percent ownership stake in the automaker. If the stock value increases, the government could make money in subsequent sales. In all, the Treasury owns 304 million of GM's 500 million common shares.


GM officials are barred from speaking publicly about the IPO because of federal regulations, but the company already has laid the ground work for its investor pitch.


Last week, it announced it was paying down $11 billion in debt and pension liabilities, attempting to clean up its balance sheet. The company also has made news through a series of announcements touting new jobs, additions to its vehicle line up and big multimillion investments in its plants.


GM's stock will trade on the NYSE and the Toronto Stock Exchange, the company said in August.

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