The U.S. Treasury Department has hired Lazard Ltd to advise the government on an initial public offering of General Motors Co, a source familiar with the matter said on Friday.
GM emerged from a government-sponsored bankruptcy last July, after receiving a $50 billion government bailout that gave the U.S. Treasury nearly 61 percent ownership of the company. Canada and the province of Ontario own nearly 12 percent.
GM and Treasury officials were not immediately available for comment.
The Treasury interviewed a few firms for the advisory role, including Greenhill & Co and Perella Weinberg Partners, the source said. Lazard, which was ultimately chosen, had worked with the United Auto Workers in recent years as the union negotiated its role in the restructuring of GM.
Lazard also has another connection with General Motors: its senior banker, Felix Rohatyn, was a long-time advisor to GM Chief Executive Ed Whitacre in his years at AT&T Corp .
Under the terms of the agreement, Lazard will receive $500,000 per month for the first 12 months or until the completion of an IPO. The contract is for a period of 18 months, and can be extended.
Whitacre said last month after meeting with Treasury Secretary Timothy Geithner and House of Representatives Speaker Nancy Pelosi that an IPO was a real possibility later this year or in 2011.
GM last month announced it had fully repaid the balance on more than $8 billion in U.S. and Canadian government loans extended as part of its bankruptcy last year.
Top White House economic adviser Lawrence Summers said last month that GM's better-than-expected progress had improved chances the U.S. government would sell its stake sooner than expected.
In addition to the nearly $7 billion in direct loans to GM, the U.S. Treasury extended $43 billion in bailout cash in 2009 -- for a total $50 billion investment.
The potential loss on paper to taxpayers on GM alone was once thought to be as high as $30 billion, according to the White House budget office. The projected shortfall is now under $8 billion, according to market calculations.
Whitacre said last month he was optimistic the taxpayers would get all of their money back.
The repayment of the GM loans and the completion in April of full accounting for its results since its emergence from bankruptcy in July 2009 were two key steps GM needed to make toward launching an IPO.
(Reporting by Jui Chakravorty; editing by Carol Bishopric)
(Additional reporting by Jonathan Stempel and Kevin Krolicki)