TRAVERSE CITY, MI –Co. Chairman and CEO Ed Whitacre expects the auto maker’s upcoming initial public offering to rank as the largest ever in the U.S. and anticipates all equity in the company will be purchased.
“I think the appetite for (GM stock) is going to be big,” Whitacre tells journalists after addressing the annual CAR Management Briefing Seminars here. “People I talk with say this has the potential to be the biggest offering, or IPO, ever. And I’m optimistic that will happen.”
A record GM IPO would have to surpass the $17.9 billion raised by Visa Inc. two years ago. The electronic retail-payment network sold 406 million shares at $44 apiece to beat the $10.6 billion raised by Whitacre’s own AT&T Wireless.
The global IPO record was set last month when the Agricultural Bank of China went public in a $19.2 billion deal on the Hong Kong and Shanghai stock exchanges.
Whitacre also says the auto maker wants to “roll it all out there at once.” It is unclear if the IPO would cover the investment of U.S. taxpayers or just make the U.S. a minority shareholder.
The U.S. Treasury sunk some $50 billion into GM to finance its bankruptcy and reorganization, giving the federal government a 60.8% stake in the auto maker. The United Auto Workers union owns another 17.5% through its retiree health-care benefits trust.
Whitacre also says government ownership does not affect timing of the IPO. It is widely assumed the Obama Admin. wants the auto maker to go public before the mid-term elections in November, which would weaken conservative criticism of the controversial auto bailout.
GM reportedly intends to file a notice for its IPO with the Securities and Exchange Commission sometime after reporting its second-quarter financial results next week.
“Soon as possible,” Whitacre says of the IPO timetable. “We’re going as fast as we can and not tie it to any elections. Truly, we just want it to be right.”
Whitacre calls it imperative that GM get out from under the stigma of government ownership.
“We don’t like this label of Government Motors,” he says. “We want to get away from that. We know that has turned off customers. It turns us off. People at GM are embarrassed by that.
“You lose your reputation (and) it is hard to get back. Everyone knows that, so we are working hard” on the IPO.
Whitacre hints GM’s second-quarter results will show a second impressive profit. The auto maker posted an $865 million profit in the year’s first quarter. If the company can achieve profitability in the third and fourth quarters, it would be its first year in the black since 2004.
“You’ll like it,” he says of the second quarter report. “It will be impressive.”
Whitacre also reveals the auto maker has concluded arbitration with 1,160 dealers either fighting closure or negotiating a settlement. As of Nov. 1, GM will carry 4,500 dealers to support its four brands, 28% fewer than the 6,246 stores it had with eight brands at the close of 2008.
“We’re going to have the best network in the business,” he says.
The 68-year-old executive reveals he does not plan to stay on at the auto maker long-term. Whitacre was approached by the U.S. Treasury to become chairman after GM’s bankruptcy and took over the CEO’s chair after the ouster of Fritz Henderson.
“At my age, I’m not a real long-timer,” he says.