This initiative aims to minimise instances of illegal parking
GM, 61 per cent owned by the US Treasury, will probably set a price of $32 to $33, said one of the people, who declined to be identified because the discussions are private. The automaker, which had filed with the Securities and Exchange Commission on November 3 to offer 365 million shares for $26 to $29 each, would raise $12 billion selling shares at the new high end of the price range on November 17.
The Kuwait Investment Authority, or KIA, may buy a stake of one per cent or less, one of the people said. Bader Al Saad, managing director of the sovereign wealth fund, told reporters on November 6 that it was considering an investment in GM. SAIC Motor Corp, GM’s partner in China, will probably be among the buyers, three people familiar with the plans said last week.
GM also plans to sell $4 billion of preferred stock, up from $3 billion, one of the people said. Demand has been so strong for both offerings that the Detroit-based company and the US Treasury discussed increasing the number of common shares sold, according to three of the people. GM reported a third- quarter profit of $2.16 billion last week.
“The Detroit automakers are finally right-sized and smart,” said Frank Ingarra, co-portfolio manager at Novato, California-based Hennessy Advisors Inc, which oversees $900 million, including Ford Motor Co shares. “They finally got some tough, good management in there finding better ways to do things.”
GM, led by Chief Executive Officer Dan Akerson, may file an amended registration statement on Tuesday that includes the new price range, one of the people said. Noreen Pratscher, a GM spokeswoman, declined to comment.
The increased price would help the US government recoup more of the public’s $49.5 billion investment in the company. The Treasury needs to sell GM’s stock for an average of $43.67 a share — 51 per cent higher than the top end of the original range and 32 per cent more than the $33 level — to break even, data compiled by Bloomberg show.
At $33 a share, the IPO would raise $8.7 billion for the Treasury, compared to $7.6 billion at $29 a share, based on GM’s regulatory filings and data compiled by Bloomberg. The entire common stock offering would raise as much as $13.9 billion at $33 a share if the overallotment option for underwriters to sell more stock is exercised, data compiled by Bloomberg show.
While the Treasury prefers to sell fewer shares at higher prices so it can more easily recoup its investment, GM may seek to sell as many shares as possible to cut the government’s stake, according to Maryann Keller, founder of a self-named consulting firm in Stamford, Connecticut. The automaker’s banks want a larger offering to increase their fees, she said.
This initiative aims to minimise instances of illegal parking
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