Sunday, November 7, 2010

GM to sell $13 billion in upcoming IPO

SAN FRANCISCO — Setting the stage for its long-awaited return as a public company, General Motors Co. said Wednesday it will sell $10 billion in common stock and another $3 billion in preferred shares in the open market later this month.
GM said it expects to offer 365 million common shares at a price between $26 to $29 each. Another 60 million in series B mandatory convertible junior preferred stock will be included in the deal.

The underwriters also will have the option to buy up to an additional 54.75 million common shares from shareholders and 9 million shares of preferred stock from the company to cover over-allotments.

GM also predicted a third-quarter profit of between $1.9 billion and $2.1 billion with sales of about $34 billion.

Those numbers would mark a dramatic improvement from the third quarter a year ago when GM, fresh out of bankruptcy, reported a loss of $1.15 billion on net revenue of $26.35 billion.

"We are extremely pleased with the level of progress the company is making," GM Chief Financial Officer Chris Liddell said. "We will deliver a solid and profitable first year post-bankruptcy, and we are continuing to improve our balance sheet and, most importantly, the quality of our vehicles."

Looking ahead, the Detroit-based automaker said it sees more profits in the fourth quarter as well, though the earnings likely won't be quite as strong as they were in the first three quarters of the year.

GM is slated to post its detailed third-quarter results next Wednesday.

Earlier Wednesday, GM reported a 3.5 percent jump in October U.S. sales to 183,759 cars and trucks. GM's four remaining brands — GMC, Cadillac, Chevy and Buick — have increased their sales by 22 percent this year, while the industry has only risen about 10.5 percent year-to-date.

"It would have been more advantageous had GM logged more solid quarterly earnings like this one before it went public," said Michelle Krebs, an analyst. "But there's a push by GM and from other places — including the federal government — to have GM go public and get the government out of its business."

GM is expected to begin its IPO road show this week, price its share offering on Nov. 17 and begin trading in New York and Toronto the following day.

Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch, Citigroup, Goldman Sachs & Co., Barclays Capital, Credit Suisse, Deutsche Bank Securities and RBC Capital Markets will serve as the joint book-running managers for the deal.

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