Government
could seek foreign investors for GM By TOM KRISHER, AP
Auto Writer | Sun Sep 19, 8:10 pm ET
DETROIT – Investment bankers handling
the upcoming General Motors Co. stock sale are expected
to court foreign investors as well as those in North America,
according to a U.S. Treasury Department statement.
GM and the Treasury Department would not
comment Sunday on reports that the automaker is in talks
with its current partner in China, SAIC, about buying a
stake in the Detroit company. SAIC is owned by the Chinese
government.
The Treasury Department, in a statement
issued late Friday, said investors in GM would be sought
across "multiple geographies," with a focus on
North America.
The U.S. Treasury loaned GM about $50 billion
to help it through bankruptcy protection last year. GM has
repaid $6.7 billion. The rest of the bailout money was converted
to a 61 percent government stake in the company.
The government hopes to get the remaining
$43 billion back with stock sales that could start in mid-November.
Foreign investment in U.S. automakers and
other companies is common. Before the stock sale, GM will
put on a two-week "road show" of presentations
for investors, and several stops are expected to be in cities
outside the U.S.
The Treasury statement also said banks underwriting
the GM stock sale will be expected to balance getting the
maximum price per share and return for taxpayers with having
a stable base of shareholders and keeping up interest in
several sales that will occur after the initial public offering.
Individual investors will get "ample
opportunity" to buy GM shares, but institutional investors
such as mutual funds, hedge funds and pension funds will
be sought out, the statement said.
"We expect that a large and diverse
group of institutional investors will be offered an opportunity
to participate, with no single investor or group of investors
receiving a disproportionate share or unusual treatment,"
the statement said.
The government will make ensure general
guidelines are followed in the sale "but will not involve
itself in decisions regarding allocation of shares to specific
buyers," the statement said.
Last week, new GM CEO Daniel Akerson said
it will take a couple years for the government to get its
money back, but GM has a goal of returning the cash.
Akerson, a former telecommunications industry
executive who took over from Ed Whitacre Sept. 1, said the
government bailout saved a lot of jobs at GM and helped
to preserve the U.S. manufacturing base.
The bailout has bred resentment with some
car buyers and hurt GM's sales, however. The automaker hopes
the stock sale will end its government ownership and raise
money for investment and to reduce debt.
GM filed paperwork in August starting the
process to sell stock to the public.
Akerson indicated that it would take consistent
earnings from GM and several stock sales before the money
is returned.
President Obama also has said all taxpayer
money will be returned, but spokesmen later said he meant
the money his administration pumped into GM, not bailouts
made by the Bush Administration.
GM made $2.2 billion in the first half of
the year, a strong sign to investors that it is much leaner
and healthier than it was before bankruptcy, when it was
losing billions.
The company will not sell any shares of
common stock, leaving that to the government and its three
other shareholders. But it plans to sell preferred stock,
which pays a dividend and will be converted to common shares
in 2013.
Chrysler's top executive, CEO Sergio Marchionne,
said last week he expects Chrysler's IPO to take place in
the second half of next year. Chrysler got $12.5 billion
in bailout money from the government in exchange for $7.1
billion in loans and a 9.9 percent ownership stake.