General Motors took a big step toward repaying a taxpayer-funded bailout by declaring plans for a landmark stock offering that represents a critical test for the Obama administration.
The automaker said it planned to list the shares on the New York Stock Exchange and the Toronto Stock Exchange in an initial public offering in a still-weak global market.
The Obama administration wants to be able to cast its $50 billion GM bailout as a financial success in the face of public skepticism and Republican political opposition but some analysts are wary of the offering.
GM’s IPO could be the biggest since Visa’s $19.7 billion March 2008 offering, and could raise up to $20 billion, though analysts cautioned that its size depends on still-untested investor demand for a restructured automaker with only two consecutive quarters of profits.
GM’s initial filing with U.S. securities regulators did not mention the number of shares that would be sold nor an expected price range.
“We’re looking at a second half that is potentially weaker than the first half,” said Dennis Virag, president of Automotive Consulting Group. “That could certainly hurt the share sale.”
“I don’t think this is a good time to be going public,” Virag said. “It’s more political than practical.”
Trading in GM shares is expected to start late October, which would mean trading would start just before the November congressional elections. Government officials and GM executives have repeatedly denied any link with the elections. Reuters