General Motors Co has begun work on an initial public offering of stock that could be the largest ever for the U.S. market, the automaker's Chief Executive Ed Whitacre said on Thursday.
It was the first time the top U.S. automaker has confirmed it was readying an IPO, an event that would mark its return as a public company and reduce the U.S. government's majority ownership just over a year after GM's bankruptcy and a controversial $50 billion bailout.
Whitacre, who was attending an auto industry event in northern Michigan, also said GM would detail second-quarter results next week showing that the restructured company is making money despite an anemic rebound in the U.S. economy.
We are working on an S-1, Whitacre told Reuters, referring to the U.S. Securities and Exchange Commission registration statement required for a securities offering.
I don't know when we are going to be able to file it because we still have a lot to do. It's not in the 'way, way out there,' but we still have a lot to do, he said.
The automaker has been lining up bankers for a stock offering that will give the U.S. Treasury an opportunity to reduce its 61 percent ownership stake.
People with knowledge of that process, who could not be named because the preparations remain private, had said GM's initial target was to complete the regulatory paperwork for an IPO by the middle of August.
'WE WANT THE GOVERNMENT OUT'
But Whitacre said it would take longer to prepare an IPO to take the U.S. government to a minority ownership position and allow GM to distance itself from lingering consumer anger with its unpopular bailout.
We want the government out, period. We don't want to be known as Government Motors, he said.
If GM were able to complete a stock offering by November, that would also provide the Obama administration with a sign of progress in its message that its unprecedented intervention in the U.S. auto industry has been a success.
On Thursday, President Barack Obama visited a Ford plant in Chicago, his second visit to U.S. auto plants in two weeks.
Ron Bloom, the White House adviser overseeing the government's investment in GM and Chrysler, said he believed GM was still on track for a stock sale by the end of the year.
We're hopeful it can be done this year but we're going to do it in a proper and thoughtful way. Obviously financial markets and other matters will have to be taken into account, he told Reuters Insider.
Whitacre said it could take months for the SEC to approve a registration statement and said the automaker also needed time to court potential investors with a roadshow.
Part of that message will be that GM is on track for improved profitability because it is able to sell new models at higher prices and keep leaner stock with its dealers.
Steve Girsky, GM's vice-chairman, said the new GM management team was acting with a new discipline around discounting, discipline in not letting inventories get out of control.
This is something that's new, he said.
Whitacre, 69, declined to say how long he would stay on as chief executive and chairman at GM.
A former CEO at AT&T who continues to commute to Detroit from his home in San Antonio, Texas, Whitacre was appointed chairman by the U.S. Treasury's auto task force over a year ago and became chairman and CEO in December.
It's a 24/7 job, but it is a fun job and I've enjoyed it and really we haven't put any thought into that, he said. I think everyone knows at my age I am not a real long timer, but am I having a good time? Yes.
A year after GM's emergence from bankruptcy, the automaker has completed a roughly 25 percent reduction in its U.S. dealership network to about 4,500 that goes along with cutting from eight brands to Chevrolet, GMC, Buick and Cadillac.
GM also is considering reactivating one of its closed plants and after hiring several thousand workers this year, could add more, Whitacre said.
Whitacre said he expected GM's second-quarter results would be viewed positively by potential investors and bank creditors being lined up for an expected credit line.
It will be good. It will be impressive, he said.