GM IPO Timed to Complete Just Before the November Elections

It will be a wonder if the stock market remains favorable to an IPO of this size by October.

ABC News
GM IPO Filing Delayed Until Early Next Week
By Soyoung Kim
August 13, 2010

NEW YORK (Reuters) - General Motors Co has delayed its IPO filing until early next week as it updates its prospectus with the recent CEO change and a management risk factor, a source familiar with the situation said on Friday.

The filing with the U.S. Securities and Exchange Commission was originally scheduled for Friday, sources said previously.

GM Chief Executive Ed Whitacre said on Thursday he would step down and Dan Akerson would take over, effective in September.

The source who said the filing had been delayed declined to be named because preparations for the IPO are not public.

GM's several-hundred-page prospectus will not provide the number of shares to be sold or the pricing range. It will cite the company's bankruptcy, steps completed in restructuring, financial projections, details of ownership, and a large set of risk factors, sources have said.

GM is now adding a new risk factor regarding the departure of Whitacre and increased uncertainty about the automaker's long-term leadership and the change is expected to take more than a day, the source said.

By filing initial paperwork with the SEC next week, GM is aiming to complete its IPO between late October and the U.S. Thanksgiving holiday, another source familiar with the matter said.

A successful GM IPO, which could be the largest ever for the U.S. market, would hand the Obama administration an important political win against critics of its controversial $50 billion bailout of the top U.S. automaker, analysts have said.

The automaker secured a $5 billion credit facility this week, two sources briefed on the deal told Reuters on Wednesday, clearing the last remaining hurdle toward an initial public offering of stock expected to make the U.S. government a minority shareholder.

Ten major banks have signed on to the $5 billion credit facility, committing up to $500 million each, but the individual commitments would be cut as GM adds more banks in other countries and emerging markets as part of its efforts to attract global investors, sources said...

General Motors Wants to Get Back into Financing to Increase Its Profits

Bloomberg reports that GM Considers Buying back GMAC

Or starting a new unit.

Having its own financing unit will 'increase its profitabiltiy.'

"As a dog returns to his vomit, so a fool doth repeat his folly." Proverbs 26:11

Unless of course you get to keep the gains, and a greater fool, the public, assumes your losses.

It's good to be the King, but cheaper to lease one.

AP
GM wants to re-enter auto financing
Tom Krisher
Tuesday May 11, 2010

DETROIT (AP) -- General Motors Co. executives want their own auto-financing arm so they can offer more competitive lease and loan deals, according to a person briefed on their plans.

The executives want to buy back the auto financing business from the former GMAC Financial Services or start their own operations, said the person, who asked not to be identified because the plans have not been made public.

A top GM executive has told dealers about the plans, the person said.

GM sold a 51 percent stake in GMAC Financial Services in 2006 when it was starved for cash. The new owners, led by private equity firm Cerberus Capital Management LP, ran into trouble in 2008 with bad mortgage loans and had to be bailed out by the federal government, which now owns 56 percent of the company.

Earlier this month, GMAC changed its name to Ally Financial.

GM dealers say that since GMAC is responsible for making its bottom line look good, it is less likely to lose money by offering to finance sweet lease deals or zero-percent financing. A GM-owned auto financing business would be more likely to "take a bullet" for the company to sell more cars and trucks, the person said.

Competitors, such as Ford Motor Co. or Toyota Motor Corp., control their own financing arms.

GM spokesman Tom Wilkinson said Tuesday that the company would not comment on speculation....

GM to Invest $1 Billion of its US Rescue Package in Modernization - In Brazil

Here is a nice example of how investing in nationless corporations, without conditions, does very little for your use of capital and your good intentions. Because in fact the US rescue package was not an investment, but a grant. We do not investment our tax receipts in private corporations. We provide relief, grants, subsidization. If the investment was a good commercial arrangement it would not require your public assistance funds.

If General Motors wishes to upgrade its facilities in Brazil, it ought to seek the money from profit-seeking private investment, or from the government of Brazil.

And anyone who believes that General Motors should be able to do whatever they wish with a grant from the public treasury is a either a fool or a fraud. And that same measure applies doubly to the packages for the Wall Street banks which are as much bribe as bailout.

On a related topic, there is a significant amount of 'Smoot Hawley II,' anti-protectionist rubbish talk swilling around the webs. If free trade did exist as the norm then it would be a good thing to uphold it. As it is, rogue players have turned that into a farce.

The problem with the industrial policy of the US is that we do not have one, whereas several other powers do and follow it, aggressively.

We stand for 'free trade' where other countries manipulate their trade policies and currencies to advance mercantilism that happens to be favored by many US corporate powers in search of cheap labor and the circumvention of environmental, health, child labor, and assorted public reform policies.

Inevitably, and this is what the corporate spinmeisters do not wish you to know, is that unrestrained 'free trade' will conflict and be used to undermine domestic policy and civic standards to the lowest common denominator of human misery and exploitation in the world.

We are playing by the rules of soccer in a game of lacrosse.

Follow Up On February 10: GM has subsequently stated that the head of GM in Brazil was misquoted or mistaken, and that the billion dollars is coming from local sources.

GM Says Not Sending Any Money to Brazil

Latin American Herald Tribune
General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program
By Russ Dallen

SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil's automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

The executive said that the company will operate a "conservative" scenario in 2009 with an estimated production of 2.6 million units, and another more "optimistic" that contemplates sales of 2.9 million.

This year sales will reach 2.85 million vehicles, which represents a growth of 15% over last year.

GM Cuts 2009 US Sales Outlook to 27 Year Low - Wall Street Rallies

A grim outlook from General Motors today as it continues to attempt to wring concessions and donations from anyone and everyone.

The market rallied after this news. If this is confusing, read this blog entry from earlier today on the technical state of the SP500 futures.

Its reassuring to see that the economic carnage has not made the banks and hedge funds too glum to engage in the usual option expiry market manipulation. They'll never learn. Keep your powder dry because there are some rough seas dead ahead.

"As a dog returns to its vomit, so a fool returns to his folly. " Proverbs 26:11

Bloomberg
GM Says U.S. Auto Sales May Tumble to 27-Year Low on Economy
By Jeff Green

Jan. 15 (Bloomberg) -- General Motors Corp. cut its estimate for 2009 U.S. industrywide auto sales to 10.5 million units, a total that would be the lowest in 27 years, as a worsening economy crimps demand.

The new outlook replaces a projected range of 10.5 million to 12 million vehicles, GM said in slides for a Deutsche Bank AG conference today in Detroit. Global sales will fall to 57.5 million autos from 67.1 million last year, GM said.

GM is using the sales estimates to craft a proposal to cut costs, revamp operations and show it can repay $13.4 billion in Treasury Department loans. A weakening economy may force the biggest U.S. automaker to seek additional government funding after it completes the viability plan due March 31.

“We’re on track,” Chief Executive Officer Rick Wagoner told analysts. “We’re confident GM will come through this a stronger company.”

Wagoner said this week that the loans were sufficient for now and that he would review GM’s needs at the end of this quarter. He joined Chief Operating Officer Fritz Henderson and Chief Financial Officer Ray Young at the Deutsche Bank meeting.

GM gained 5 cents, or 1.3 percent, to $3.90 at 2:32 p.m. in New York Stock Exchange composite trading.

Global economic growth may slow to 0.5 percent this year from 2.3 percent, GM said today.

The U.S. recession is ravaging consumers’ auto purchases, sending deliveries plummeting to 13.2 million vehicles in 2008 after an average of about 16 million annually during the past decade. U.S. job losses last year were the worst since 1945.

Industrywide sales of 10.5 million vehicles in the world’s biggest auto market would be the lowest level since the 10.36 million units of 1982, according to research firm Autodata Corp. of Woodcliff Lake, New Jersey. The total in 1981 was 10.6 million.

Union Workers, Bondholders

GM is seeking concessions from its largest union and is chopping debt in half because the government can call the loans unless the company shows progress in reshaping itself by the March deadline. The Detroit-based automaker plans to drop or de- emphasize half of its brands and seeks to cull 1,700 dealers from its total of 6,400.

It’s premature to discuss how GM might work with bondholders to win their assent in reducing debt, Wagoner said this week. Government loan conditions require GM to cut its unsecured public debt by at least two thirds in an exchange with bondholders for equity or other methods.

The debt exchange is designed to pare $27.5 billion in unsecured debt to about $9.2 billion in a swap for equity, Young said.

Health-Fund Costs

GM also needs to reduce its obligations to a union retiree health fund to $10.2 billion, a 50 percent trim, in a separate equity swap, Young said. About $14.1 billion in other debt won’t be affected.

After saying it would run short of operating cash by the end of 2008 without an infusion of financial aid, GM received the first $4 billion in loans on Dec. 31 from the Troubled Asset Relief Program. The money is being used to pay bills, mostly to the automaker’s 3,000 suppliers.

An additional $5.4 billion is due this month. Should Congress agree to release a second $350 billion in TARP funds, GM will get $4 billion more in February. An initial progress report must be presented to the Treasury Department by Feb. 17.

The loans are secured by almost all of GM’s available unsecured assets and as a secondary lien against other assets already secured, Young said today. GM also plans to draw $1 billion in Treasury loans granted to the automaker as part of a $6 billion bailout of the GMAC LLC finance unit.

GMAC: Its Good to Be a Bank

"The bondage of fifteenth century serfdom has become the catalyst for causing the middle-class to grovel for survival. They mistakenly assumed that the business and political leaders would maintain a minimum concern for those whom they serve or lead." Warren B. Eller, 1931

“This country is governed for the richest, for the corporations, the bankers, the land speculators, and for the exploiters of labor.” Helen Keller

Without banking reforms and an equitable median hourly wage, the development of new variations of debt creation for the people to support the corporate status quo is futile, if not cruel.

Bloomberg
Treasury to Buy $5 Billion GMAC Stake, Expand GM Loan
By Rebecca Christie and Hugh Son

Dec. 29 (Bloomberg) -- The U.S. Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of General Motors Corp.

Treasury will also lend an additional $1 billion to GM so the automaker can participate in a rights offering at GMAC to support the lender’s reorganization as a bank holding company, the Treasury announced today. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC.

Separately, GMAC said it has accepted all bonds tendered in a debt swap designed to reduce its debt load.

“Once the offers are settled, which we expect to do promptly, results will be disclosed,” said spokeswoman Gina Proia in an e-mail.

“The company intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles,” GMAC said in statement.

GMAC had limited loans to buyers with the best credit ratings, cutting into GM’s sales.

The credit from the Treasury is under its Troubled Asset Relief Program and comes after the Federal Reserve last week approved GMAC’s application to become a bank holding company.

“This is part of our strategy to position GMAC for long term stability,’’ said Toni Simonetti, a spokeswoman for GMAC. “The reason we’re doing this is so we can provide credit to consumers; we’ll put these funds to use right away.’’

FDIC Guaranty

GMAC will “continue to pursue’’ other ways to boost liquidity, including applying for an Federal Deposit Insurance Corp. guaranty program and attracting retail deposits from consumers, Simonetti said. (We are all banks now - Jesse)

Becoming a bank makes it easier for GMAC to get federal aid and eases the threat of a collapse, which threatened to dry up credit for purchases of GM cars. Dealers depend on GMAC to finance about three-quarters of their inventory. Analysts have said the lender’s survival is a crucial step toward saving GM, which has said it may run out of cash.

GMAC joins more than 190 regional banks, commercial lenders, insurers and credit-card issuers seeking funds from the Treasury’s bailout program for financial firms. American Express Co., the biggest U.S. card company by sales, and CIT Group Inc., the biggest independent commercial lender last year, won capital infusions last week after converting into banks.

Slow Sales

With GM selling cars at the slowest pace in 26 years and the country in its worst housing crisis since the Great Depression, GMAC and its Residential Capital LLC unit have no way to revive their own revenue and have been shut out of credit markets. GMAC has $540 million of bonds due this month and another $11.6 billion that mature in 2009 and previously said it would cancel plans to become a bank if the debt swap failed.

The Fed has since granted approval before the swap was finished....

General Motors is on the Brink of Default and Bankruptcy

Right at the close of trading Fitch and the other rating agencies cut General Motors debt ratings. In particular Fitch was quite specific that GM will either be bailed out or will be forced to default and restructure.

"Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default."

In addition, and perhaps unrelated, AIG has moved its 3Q 08 financial results from after the close of trading on Monday to 6 AM, before the Bell.

Another late Sunday night before the start of Asia trading?

Fitch Places GM's 'CCC' IDR on Rating Watch Negative
07 Nov 2008 3:57 PM (EST)

Fitch Ratings-New York- Fitch Ratings has placed the Issuer Default Rating (IDR) of General Motors (GM) on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position.

Given the current liquidity level of $16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default.

With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels.

GM remains dependent on the capacity and willingness of its suppliers to continue extending trade credit, as the company does not have sufficient resources to finance ongoing operations in the event that trade credit is curtailed.

Over the intermediate term, GM's expanded debt load and debt service costs, when combined with significantly reduced earnings capacity, indicate that material improvement in the balance sheet is unlikely absent a restructuring of the balance sheet. This could eventually take place through a distressed debt exchange.

Fitch believes that direct federal aid is highly likely to be forthcoming, although the amount, timing, structure and term remain uncertain. Without material federal assistance in the short term, Fitch would review the rating for a potential downgrade to 'CC', which indicates that default is probable.

Given the extended cash drains expected through at least 2009 and the need for balance sheet restructuring, provision of federal assistance may not preclude a downgrade to 'CC'.

Deteriorating macroeconomic conditions and the effects of the credit crisis continue to ratchet down retail sales volumes and to expand negative cash flows.

Restructuring costs, other one-off items, and working capital outflows have exacerbated operating losses, factors that will continue to hamper any recovery in the near term. The rationing of retail financing highlights the tremendous capital advantage held by transplant manufacturers, further impairing near-term volume and pricing potential.

In addition, Fitch has placed the following on Rating Watch Negative:

--Senior secured at 'B/RR1';
--Senior unsecured at 'CCC-/RR5'.

General Motors of Canada Ltd.
--Long term IDR 'CCC';
--Senior unsecured at 'CCC-/RR5'.