New York: US auto giant GM, which was forced to declare bankruptcy and rely on taxpayer funds to stay afloat, has taken a first step away from government ownership, filing for a sale of its shares to the public.
The announcement Wednesday signaled a remarkable turnaround for the Big Three US auto manufacturer, which pulled back from the brink of collapse only after massive infusions of taxpayer money.
GM did not disclose the number of stocks that will be offered, or the price range, but the sale is expected to raise between $12 and 16 billion.
That could make the firm’s initial public offering (IPO) one of the world’s largest, and second in the United States only to credit card giant Visa’s March 2008 sale which raised more than $19 billion.
The move could prove a boon for President Barack Obama in November’s congressional elections, providing hard evidence to voters that his economic policies helped 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 with the US Securities and Exchange Commission, GM said it planned to apply for listings on the New York and Toronto stock exchanges.
“The amount of securities offered will be determined by market conditions and other factors at the time of the offering,” GM said.
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 US 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 quarterly profit, a second consecutive quarter of 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 Treasury to begin offloading the 61% stake it acquired in last year’s $50 billion 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 the offering would not include $2.1 billion in preferred GM shares that it owned, which are in addition to the common shares representing the 61% stake.
Founded in 1908, GM sold more vehicles than any other automaker from 1931 until 2008, when it was overtaken by Japan’s Toyota.
The largest of the Detroit Three automakers, GM saw its US market share fall from a peak of 54% in 1954 to 19.6% in 2009.
The bailout led to restructuring, mass layoffs and plant closures, but ultimately brought GM to stability and profit.
For Obama, the IPO filing could fit neatly into a campaign to persuade voters that massive government spending kept US firms and the economy alive.
The timing “suits the government and it suits GM,” according to Kenneth Elias, a partner at auto sector analysts Maryann Keller & Associates.
But others warned GM’s announcement had been “rushed,” and cautioned an undersubscribed offering could hurt Obama.
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.
The surprise announcement was seen as another sign of GM’s desire to free itself from government control.