The New York Times reports that GM will offer 2.5 billion shares of common stock in July 2010, just a year after emerging from government-backed bankruptcy. The news comes from regulatory filings in which GM says it will also begin sharing financial data after the third quarter. The Wall Street Journal voices serious doubts as to whether GM is ready for such an offering, pointing to its weak showing in the current cash-for-clunkers bonanza, falling sales, and product weakness. Meanwhile, PTFOA chair Ron Bloom tells the NYT that a Chrysler IPO is further off. “I don’t think Chrysler’s IPO is a 2010 event,” Mr. Bloom said at the Center For Automotive Research’s conference in Traverse City. “I think it’s a little further off. But again, that will be the board’s judgment.”
When asked to elaborate, Mr Bloom said “the definition of ‘practicable’ is a bit like ‘pornography,’ though; we’ll know it when we see it.” Though Bloom clearly wants to extricate the US government from its underperforming investment (to put it politely), he knows simply dumping the stock would destroy what little value remains in Chrysler or GM. “We would be looking to sell sooner rather than later,” he said. “But we’re not going to be foolish. We’re not going to dump the stock tomorrow. There is no practical way to exit an investment of this size in one fell swoop.”
Freaking hilarious. A loser car company that stole millions of tax payer dollars to stay afloat, and will eventually fail again is going IPO??!! It doesn’t get any better than this. Hey, GM. . Please die already. Your cars are garbage and your unions aren’t part of the 21st century business model.
Somehow I’m reminded of that classic Billy Preston song, “Nothing From Nothing Leaves…Nothing.”
of course i’d buy gm what could go wrong ?
speedlaw, BuzzDog, 06M3S54B32: y’all just don’t get it. See, none of that old stuff matters, ’cause this is the new GM. It’s not the same company as the old GM. Shut up, it is not! Is not! IS NOT!
I will be happy to buy at GMs IPO as soon as I can find someone find someone who will purchse my “Prime” Florida real estate and Confederate War Bonds.
At least they have a goal they are working towards. Would you rather their plan of record be to stay a private, government owned company forever?
“At least they have a goal they are working towards.”
What goal is that? To make total shit quality, ugly ass cars; Go bankrupt again, and steal more tax dollars money. What amazes me is how many people bitch about welfare, but see no problem with Government giving tax payer money away to a company. It’s just UAW welfare.
What kind of investors will want to buy this new GM stock, considering that the investors who bought GM stock pre-bankruptcy/bailout lost almost all their money because Obama’s edict gave remaining company assets & ownership to the unions & the Govt? But, for those Wall Street investors and rich people who want to gamble, will Obama let them buy gm stock and potentially profit off of the backs of the factory workers, considering they are supposedly greedy pigs? Perhaps there will be a $45K investment ceiling on gm stock just like the ceiling on cars one can buy when trading in a “clunker”, to ensure the “greedy rich folk” can’t benefit from the program? And, what about the common folk? Shouldn’t they steer clear from investing in gm, since “big business” is “evil”, and lending (investing) money in a big company like gm will only make it bigger?
“What goal is that?”
Being profitable enough and stable enough to have a successful public stock offering.
Shout all you want, but GM didn’t steal taxpayer money. GM got the money from democratically elected representatives. GM didn’t steal the money any more than Boeing stole the over $20 Billion wasted on the failed Future Combat Systems’ Manned Ground Vehicle.
When you don’t like how your elected representatives do their jobs, it is your right and duty to vote against them next time around. But, that doesn’t mean that any government decision you disagree with is somehow illegitimate.
“What kind of investors will want to buy this new GM stock, considering that the investors who bought GM stock pre-bankruptcy/bailout lost almost all their money because Obama’s edict gave remaining company assets & ownership to the unions & the Govt?”
No matter what Obama did or didn’t do, the common shareholders in GM were going to get absolutely nothing. Anyone who was still buying or holding GM stock in the second half of 2008 had lost every penny no matter what the government was going to do or not do. GM was technically bankrupt (liabilities far in excess of assets) for a long, long time before actually going to court. Obama didn’t act by edict. The courts reviewed a series of challenges from multiple sides and saw little merit in any of the challenges. The judges involved were not appointed by Obama nor do they need to please him to keep their jobs. All this “edict” and “Chairman” talk does a gross disservice to the country.
“No matter what Obama did or didn’t go, the common shareholders in GM were going to get absolutely nothing. Anyone who was still buying or holding GM stock in the second half of 2008 had lost every penny no matter what the government was going to do or not do.”
I strongly disagree with that. Why didn’t the shareholders get part of the company instead of the union? Take your blinders off man. This was an out and out payback to the union for helping obama get elected.
“Why didn’t the shareholders get part of the company instead of the union?”
Exactly. And I don’t notice anyone “shouting”, but merely questioning handouts to a bankrupt company as a payoff to a politically favored gang, er, group. BTW, this was opposed by a majority of the electorate.
Of course, buying union loyalty is paying off: we can see what the SEIU is doing to citizens who dare to dissent about obozocare at town hall meetings. Yeah, hope and change. Transparency. The light worker, The One
Why didn’t the shareholders get part of the company instead of the union?
The common shareholders are at the very back of the queue, behind the VEBA. Unless you wanted the court to violate the law, the VEBA had priority over common. The law doesn’t change just because you dislike the union.
Meanwhile, the secured GM bondholders got 100 cents on the dollar. Unlike Chrysler, there was enough cash to pay them, so they got paid.
So you hate the union — that’s lovely and within your right. But the company can’t produce anything without workers, and there is no way that they could possibly start from square one with a whole new workforce, which made it necessary to cut a deal. Reality bites sometimes, so get over it already.
What kind of investors will want to buy this new GM stock
Investors who believe that they can sell the stock for more than they paid for it.
I personally won’t be one of them, barring some significant changes in the management and product lineup between now and then, but I can tell you that I will very happy if an IPO raises enough cash to repay our tax dollars. I can’t see why anyone would oppose that.
Hubris!
This springs to mind.
Hmmm.
So union thugs strike and cripple major manufacturers, beat up replacement workers, get paid lavish benefits that even federal government workers don’t get, and when their pay and benefits (that they extorted) help force a company into bankruptcy, they get a big chunk of stock in exchange for the promises they extorted from said bankrupt company.
Next thing I’ll be told to do is buy American so that line worker can get paid more and have better benefits than I enjoy…
I’ll pass. Sorry GM. Ya lost me forever.
What clever timing – their IPO will correspond with the runup hype for the Volt.
Anyone buying either one – GM stock or Volt – will be left unhappy.
So when a thug meth-head beats and robs you, you should be happy or resigned that he’s trying to feed his family? Furthermore, it seems you should send their children to college on your dime? I can’t believe I’ve never seen the big picture before!! This feeling… it… it… it must be what having skin in the game feels like!
Somewhere, Billy Durant is laughing heartily. “See, we’ll float a new issue of stock, and use the money to acquire the DeSoto and Hudson factories, and then we’ll make a nifty new car we’ll call the Oakland which will underprice the competition because we’ll be vertically integrated from buying Goodyear …”
GM got rid of 66,000 workers since 2006 and wants to jettison another 7,500 by the end of this year, bringing their workforce down to 40,500 according to Tuesday’s NY Times Business Section. GM also plans to close another dozen plants.
Unemployment in Michigan is almost 20%.
In a few years our cars will be electric and come from Vietnam where they will be assembled by pretty Asian women:-)
Are you union haters happy yet?
Oh, GM is also eliminating 35% of its executives.
They key question is who is going to LEND to the new GM and Chrysler, after having been burned once before.
The recent NYT article showed how the secured bondholders at Chrysler had no bargaining power. In theory, they should have been paid off 100% (like the GM secured debtholders were) before anyone else got a dime.
The problem was, Chrysler was so worthless that these guys would likely have ended up with a fraction of what they were owed anyway. Would someone have come in and paid enough for Chrysler’s assets in a Ch. 7 to give them a better deal than what they got from the government? We’ll never know.
I don’t for a minute believe that TTAC commentators with an agenda understand the intricacies of bankruptcy law better than the judges who do this kind of work all day every day. Multiple levels of independent judges signed off on the GM and Chrysler deals.
Would someone have come in and paid enough for Chrysler’s assets in a Ch. 7 to give them a better deal than what they got from the government? We’ll never know.
Sure we know. The answer is: not even close.
The Chrysler bondholders were offered the company. If they could have made more by taking it over and parting it out, they would have.
The bondholders made more than they would have otherwise. Some of them paid 14 cents for the bonds, and made a tidy profit.
If you want to loan money to someone and have a guaranteed payment, then US treasuries are your own only choice.
The Chrysler bondholders were offered the company. If they could have made more by taking it over and parting it out, they would have.
According to their lawyer, Lauria, that’s not true. The bondholders were never “offered the company”. As a matter of fact, that’s one of the things Lauria argued before the bankruptcy judge.
I personally won’t be one of them, barring some significant changes in the management and product lineup between now and then, but I can tell you that I will very happy if an IPO raises enough cash to repay our tax dollars. I can’t see why anyone would oppose that.
Some people are simply more interested in bitching than anything else.
I hope the IPO is a huge success. But, I’m also one who won’t be buying unless there is significant change in management.
You all are missing the point! A GM IPO in July 2010 is designed to do one thing and one thing only. It is to remove the GM fiasco as an issue for the 2010 elections. The Obamaites will claim credit for “rescuing GM” and claim that the whole deal was a plus for the country and the taxpayers. The next GM disaster will occur in 2011 when the weak product pipeline runs full bore into a revitalized Ford, Toyota,, and Honda lineup – and it will still be “Bushes fault”
GM will be suffering from too much management from Washington and not enough recognition of the truly rotten to the core culture that was not resolved in round one of the GM Death March.
Just my opinion but I’ve been around the auto business a long time and have been right a lot more than wrong.
@ John Horner
FWIW – I agree with your reasonable statements. And you are correct – there are far too many folks who see EVERYTHING through their peculiar political prisms.
>Multiple levels of independent judges signed off on the GM and Chrysler deals.
Nothing went before the judges before Comrade Obama strong-armed enough creditors to take a major haircut so that a “majority” of creditors “supported” the prepackaged plan.
That prepackaged plan was, plain and simple, a bailout of the UAW, not the companies.
Right now the UAW is a parasite that, via the IRS, is attached to my wallet – and yours. As long as its alive the UAW, through the “employer,” will keep getting subsidies and bailouts.
WHICH IS WHY I ENCOURAGE EVERYONE TO NOT BUY ANY NEW VEHICLE ASSEMBLED BY THE UAW – THE SOONER IT DIES OFF THE SOONER IT’LL STOP FEEDING OFF OF OUR WALLETS.
This will be the UAW generating cash from their “investment” to make payments?
Many commentators had observed that the UAW won’t be able to afford to sit on “ownership” when they need cash.
A “normal” IPO usually strives to raise money for productive purposes in an expanding or transforming enterprise. Having investor money come in just to pay out to the UAW will make the attractiveness near zero for “investors”.
A “normal” IPO usually strives to raise money for productive purposes in an expanding or transforming enterprise.
That is one scenario, but often inside holders of stock in a newly public company either put some of their shares into the IPO, or get registration rights which allow them to sell some or all of those shares on the market some period of time after the IPO (after a lock-up period).
I’ve been a key officer of a company during its IPO and am intimately aware of how the process works. Investors in private companies which aim to one day go public normally look to the public offering as the means to liquidity. In recent years IPO activity has been very minimal, and venture investors have been stuck selling off portfolio companies to larger public companies. Hopefully one day a vibrant IPO market will return.
@ John Horner
Hopefully one day a vibrant IPO market will return.
In the USA (even Europe) the people with money to “invest” are too interested in speculation/gambling.
Milken, Enron, PE, day-trader, 401 managers and horrendous wealth transfer with laissez-faire regulation nearly sank us all.
Supporting ideas and productive enterprise will require the undoing of a crazy financial mindset that has taken hold since the mid-1980s.
I think it’s changing elsewhere faster. On my desk I have two projects which will mature over 25-30 years. The investors will get a steady return in a growing industry. The projects are oversubscribed, but only about 2% of the money is from the USA. Why? Because a common question we get is “can I get in and out for a profit in 3 years?” No.
I agree with you PeteMoran, the get rich quick gambler mentality which has overrun the US financial markets is a huge problem.
Milken, Enron, PE, day-trader, 401 managers and horrendous wealth transfer with laissez-faire regulation nearly sank us all.
I don’t believe there was any lack of regulation and laissez-faire regulation is a contradiction in terms.
however with the GM IPO I suspect a lot of people will take a pass on that, largely because there is too much old GM in new GM.
@ HEATHROI
laissez-faire regulation is a contradiction in terms
I intended laissez-faire as an adjective.
I love all the talk about “legalities” when it comes to screwing the old GM shareholders.
Meanwhile, GM sheds more of its responsibilities through its Obama-greased bankruptcy:
http://www.autoblog.com/2009/08/07/report-gm-gets-out-from-under-its-polluted-sites-scot-free/
GM can kiss my ass.
Having investor money come in just to pay out to the UAW will make the attractiveness near zero for “investors”.
That wouldn’t happen. The VEBA owns stock; the union’s play would be to hope that their own stock gains market value as a result of the IPO, which the VEBA can sell into the open market.
You would expect that equity raised from the sale of stock would go toward new investments in the business, with some of it possibly going toward paying down debt. If you were to analyze that as a fundamental investor, ala Warren Buffett or Benjamin Graham, then an investment would be a yes vote on the management team and the prospect for increases in future earnings.
Now personally, I wouldn’t hitch my horse to that wagon, but then again, neither did I have as much faith in the earlier management teams as did the markets. The markets liked Jack Smith and generally didn’t have a problem with Wagoner, whereas I thought that both of them were awful. Then again, I don’t tend to look at this business in quite the same way as do most of the automotive stock analysts, who seem to generally be among the worst on the Street.
+1 for mach1. This has nothing to do with finance, business plans, product plans or marketing.
It’s all about “re election plans.”
How many more Billions will the stupid taxpayers good old guv have to give to get the banks to buy up the IPO shares?
Or will the control they’ve gained with the previous Billions be enough to force those banks to “buy” in?
pch101: I personally won’t be one of them, barring some significant changes in the management and product lineup between now and then, but I can tell you that I will very happy if an IPO raises enough cash to repay our tax dollars.
This is what worries me more than anything else. Unlike many posters, I had no problem with President Obama giving Rick Wagoner his walking papers and the oversight team pushing the shutdown of Pontiac.
But he replaced Wagoner with…GM-lifer Fritz Henderson. Now even that TTAC favorite, Bob Lutz, is back on board.
Then we discover that the next top-of-the-line Cadillac may be…based on a front-wheel-drive platform shared with Chevrolet. Maybe Cadillac can call it the “Cimarron.”
But there are lots of neat GM concepts ready for the show circuit – just as there have been for every auto show season since 1999. Didn’t do the corporation much good, in the long run.
It isn’t just rabid Obama-bashers who are reluctant to invest hard-earned money in that enterprise. The “new” GM smells a lot like the “old” GM.
The “new” GM smells a lot like the “old” GM.
Regardless of what you or I think, I’m reasonably confident that Wall Street won’t think of it this way.
Most of us who are well versed on this topic know that this was a management problem that drove a product problem. But the typical Wall Street view is that this was primarily a cost problem, which was largely created by labor and “legacy”.
The Street actually liked Wagoner, believe it or not. Unlike us, they thought that he was fine, with his focus on cost management and negotiating union concessions. They’ll think that the cost reductions created by the bankruptcy will do the trick.
Of course, this is wrong. But they’ll be the ones who end up supporting the IPO, so let’s keep this secret between us, OK?
Pch101: The Street actually liked Wagoner, believe it or not.
This, to me, is the most mind-boggling part.
Pch101: But they’ll be the ones who end up supporting the IPO, so let’s keep this secret between us, OK?
If they enable GM to pay back the government, that is fine with me.
Meanwhile, we’ll most likely replace our Ford and Honda with…another Ford and Honda. That’s our “vote” on the whole matter. Not because of ideology, or anger at the union (after all, Ford is unionized), or because we are against bailouts. I just don’t see anything all that attractive – that we can actually afford – coming from the “new” GM in the next 1-2 years.