Handling [GM’s] IPO assignment is something of a vanity project for the Wall Street banks, given the relatively small fees the banks will earn through the process. One person familiar with the offering said that the banks may earn less than 1% of the overall deal. At a valuation of $10 billion, that would equal a total fee pool of $100 million.

The Wall Street Journal [sub]’s take on the forthcoming GM IPO. Persons anonymous tell The Journal that Morgan Stanley and JPMorganChase are the frontrunners in the vanity project sweepstakes. But as charitable as the one-percent arrangement seems, the Wall Street mavens have their work cut out for them…

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Two Republican congressmen have written to GM CEO Ed Whitacre, asking him to halt the destruction of electronic documents as long as the automaker is owned by the government, reports the Detroit News [Full letter in PDF here]. Reps Darrel Issa (R-CA) and Jim Jordan (R-OH) allege that documents destroyed by GM could have helped their House Oversight Committee investigation of GM’s decision to run its infamous “payback” ad, and shed light on government interference in day-to-day operations including influence over plant locations and a “secret agreement” on revised EPA standards. The congressmen write:

In light of these ongoing investigations, we are deeply disturbed to learn that GM is engaging in a continuous process of destroying documents relevant to the Committee’s oversight efforts

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Thanks to congressional arbitration, GM’s dealer cull has been steadily downsized since The General made the decision to axe nearly 2,000 dealers during last year’s bankruptcy. Going into bankruptcy, GM had about 6,000 dealers nationwide, and it culled nearly 2,00 of them in an attempt to lean out its distribution channels. But now the Detroit News reports that GM’s North American boss Mark Reuss has said that about half of those culled dealers will have been reinstated by this July, bringing GM’s dealer count back to the 5,000 ballpark.
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Somewhere under a “Mission Accomplished” banner on an aircraft carrier, former car czar Steve Rattner is starting to get a bit lonely. Reuters reports that the Securities and Exchange Commission is seeking a three year ban on Rattner that would prevent him from working in the securities field. The ban stems from a recently-settled investigation into kickback allegations at Rattner’s former investment firm Quadrangle Group (involving a distribution deal for his brother’s low-budget movie “Chooch,” no less).

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We don’t need an aircraft carrier and “Mission Accomplished” banner, but isn’t it time to agree that the auto rescue has been a success?

Former auto czar-let Steve Rattner picks an unfortunate choice of metaphors to celebrate the possible success of the auto bailout in an op-ed for the Washington Post. Meanwhile, the latest Treasury estimates still show a projected $24.6b loss on the bailout, so yeah, let’s hold off on that carrier-based victory party.

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Technical experts analyzing GM’s request for $1.35b in Opel aid from the German government have reported back, and the signs aren’t looking good. According to the Financial Times, the experts advising a political committee that will rule on Opel aid next week returned a negative outlook on The General’s request. German officials tell the newspaper that

the technical experts’ stance was “formally not a complete No” but that it “meant No in practice”

GM is requesting €1.9b in loans for its €3.7b restructuring of Opel. Though it looks like the €1.2b ($1.35b) it is requesting from Germany will be turned down, some portion of that amount might still be awarded by local German state governments. If that scenario plays out though, more employment cuts could be in order for Opel’s German production staff.

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One year ago today, General Motors took the “unthinkable” step of filing for bankruptcy. It was a seminal moment in the history of the American auto industry: the day that once-dominant GM finally shed its illusions, faced up to reality, and plunged into the cold, cleansing waters of bankruptcy reorganization. Or, to use a more accurate metaphor, it was pushed in. After decades of decline masked by decades of PR-driven denial, GM had literally lost the ability to self-correct.

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The Detroit News reports that the Treasury Department has hired Lazard Frères & Co. as an advisor to GM’s forthcoming IPO sale. And with news of the hiring comes confirmation that GM’s IPO really is coming soon: the investment bank will receive half a million dollars, according to the DetN, but that amount will drop to $250,000 if the IPO isn’t completed within one year. If you’re one of the GM boosters who believes that an IPO will repay all or most of the government’s investment in GM, it’s time to start saving those pennies. You have less than a year now to put your money where your mouth has been.

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Speaking at a Brookings Institution summit on cities affected by the auto downturn, National Economic Council director Larry Summers said that taxpayers will likely see “most, if not all” of its $42b outstanding “investment” in GM returned when the automaker goes public. According to the Detroit Free Press:

Summers’ comments were backed up by an analyst estimate today that suggested the new GM’s equity could be worth between $75 billion and $78.5 billion – giving the government more than $42 billion for its 60.6% stake.

Obama Administration officials had previously said that taxpayers stand to lose as much as $34b on its bailout of the auto sector, including GM, Chrysler and their finance unit formerly known as GMAC (now called Ally Financial).

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Sadly, my internet came crashing around my ears just as GM’s Q1 results conference call was getting interesting. Typical Monday. I’ll rock myself to sleep tonight with a recording of the call and report back tomorrow, but at this point the big news is plainly visible on this single slide. Yes, GM finally got control of its incentives and wrestled them below the industry average… for a month. That month (March) also just happened to be the worst month this year for GM market-share wise. The next month (April), the incentives went back over the industry average, and market share increased once again. The lesson seems obvious: GM won’t gain market share on promises of high-quality cars and taxpayer payback alone.

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What, you want more context from a headline? It’s not like we’ve lied to you or anything. Technically, every word of it is true. OK, OK, here’s the fine print: CGI Holding, owners of “Old Chrysler” and Chrysler Financial paid $1.9b of a $4b pre-bankruptcy TARP loan, according to Automotive News [sub]. Though far less than face value, that payback “is significantly more” than what Treasury was expecting in return. In other words, this is great news if you thought the bailout would be a complete loss. Otherwise, it means that the various remains of Chrysler have repaid $3.9b of the $14.3 invested by taxpayers into the company pre-bankruptcy… and unless Chrysler’s IPO brings in about $100b, Treasury will still take a bath on the rescue.

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When we first heard that GM was eying a return to in-house financing, our first reaction was to worry that

the potential for falling back into old bad habits can’t be ignored.

Clearly our concern wasn’t wasted, as the AP [via Google] reports that The General’s major motivation for considering re-creating a captive lender is to chase subprime business its current major lender won’t touch. And considering that that lender is GM’s bailed-out former captive finance lender GMAC (now Ally Financial), which was badly burned by subprime mortgages, it’s not surprising that GM is frustrated by GMAC’s tentative approach. But should The General charge into the low-standard lending sectors where Ally fears to tread?

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Well, the suspense is over. General Motors announced its Q1 earnings this morning, and for the first time since 2007 the quarterly numbers are positive. GM’s net revenue jumped to nearly $31.5b on strong performances from its North American and GM International Operations (GMIO), and across-the-board sales improvement for the Chevy brand. General Motors Europe was The General’s sole unprofitable division for the quarter, losing half a billion dollars while it waits for a deal on financial assistance to clear. Operating cash flow was $1.75b, with about $755m of that going towards capital expenditures. That left just under a billion dollars in free cash flow, as GM finished the quarter with $35.7b in cash on hand. Net income attributable to shareholders was $1.068b, less $203m for cumulative dividends, for a total net profit of $865m [Full financial highlights in .doc format available here].

Officials working with the Department of Energy tell the Detroit News that GM and Chrysler face no major obstacles in their quest for huge retooling loans from the DOE’s Advanced Technology Vehicle Manufacturing Loan program. GM is seeking $14.4b and Chrysler has asked for $8.55b in low-cost government loans. Says Matt Rogers, a senior adviser to the Energy Department

Project finance details need to be worked through, but those things are working out just fine as we work directly with the companies. It’s really a process of making sure that each of the projects that they have are in fact competitive.

Er, competitive compared to what?

News that GM is considering a number of options for a return to captive finance, has lit a fire under Chrysler CEO Sergio Marchionne, who tells the Detroit News that

One of the things that we do not wish under any circumstance is to have an uncompetitive relationship vis-À-vis GM