Obama Says General Motors IPO A Milestone

VOA Breaking News (Voice of America)
November 18, 2010 at 6:45 am

U.S. President Barack Obama says General Motors initial public offering scheduled for Thursday is a major milestone not only for the company, but for the entire American auto industry.

In a statement issued late Wednesday, the president said the stock sale – the first for the company since it emerged from bankruptcy 16 months ago – could raise enough to almost cut in half the government’s stake in the company.

In 2009, the government loaned the company nearly $50 billion to stay afloat.

Late Wednesday, GM announced it was setting its stock price at $33 per share and analysts say the sale could raise $22.7 billion for the company, making it the largest IPO ever.

GM says it plans to sell to at least 478 million shares of common stock.

GM could increase the size of the sale even further, to 550 million shares.

Originally, the company, the world’s second largest automaker, said it would sell 365 million shares. But with the company reporting $2 billion in profits in its last quarterly reporting period, the offering has proved popular with investors.

GM earlier in the week increased the number of shares of preferred stock it plans to sell. If the stock sale does raise $22.7 billion, it would easily top the $19.7 billion first-day sale of stock in the credit-card processor Visa Inc. in March 2008.

Bankers handling the GM deal say they have had offers for about seven times the number of shares GM first offered.

If the stock sale is successful, U.S. taxpayers would stand to benefit. While the government has voiced confidence that it will eventually recoup its investment in GM, the government’s overall sale of the stock will have to average nearly $44 a share for it to break even.

Some information in this story was provided by AP and AFP.