General Motors has finalized terms for what is expected to be one of the largest-ever IPOs, to begin to repay its $50 billion government-funded bailout and reduce the US Treasury to a minority shareholder.
Potential investors are expected from all over the world, including some sovereign wealth funds.
GM plans to sell 365 million common shares, or 24 percent of its common stock, at between $26 to $29 each, which would raise around $10 billion if sold at the midpoint, according to updated IPO papers filed with the SEC.
GM is also proposing to raise $3 billion by selling 60 million preferred shares at $50 each that would convert to common shares under mandatory provisions, probably after three years.
The IPO would value GM at just over $41 billion at the midpoint of the price range, meaning that US taxpayers would suffer a loss on the controversial bailout. GM needs a market value of roughly $70 billion for US taxpayers to break even. A share price of around $50 would be needed to reach that threshold.
General Motors Corporation filed for Chapter 11 bankruptcy protection on 1 June 2009, after losing $88 billion since 2004, the last year the company reported an annual profit. General Motors Company was created 39 days later, in which the Treasury holds a 60.8 percent stake as a result of its $50 billion bailout. The IPO would reduce its stake to around 43 percent.
An IPO of this size would be the second most valuable in US history, after the $19.7 billion Visa IPO in March 2008.
GM is planning meetings with prospective IPO investors over the next two weeks in the United States, Europe and Asia.
