GM's IPO, the Perfect Way to Sell Some Cars
According to a document made public by Bloomberg, GM tried to capitalize on what is poised to become the second largest IPO in the history of the US and force banks into using some of the underwriting fees to subsidize the purchase of GM cars by their employees.
According to the document, banks were requested to come up with “ideas as to how we can use the IPO to reposition GM and its vehicles within the investment community including your firm’s willingness to reinvest any portion of any underwriting fees into the purchase of GM vehicles for your employees and/or company use.”
The document predates the agreements made by GM with the banks over the IPO fees and was made because of the administration's concern that paying Wall Street more money after the billions spent of the bailout may cause something other than gratitude for taxpayers.
“That’s hardball,” Joe Phillippi, AutoTrends consulting firm principal told the source. “After beating them down on fees they want another pound of flesh. It does sound a little unusual.”
GM is gearing up for an IPO which, depending on the circumstances, is expected to vary in between $10 billion to $15 billion. The IPO would shave 20 percent of the stake held by the US through the Treasury, meaning the US would become a minority owner (the US now holds 61 percent of GM). To do so, GM would be throwing into the market a fifth of the government's 304 million shares.
In addition to selling US' stock, GM might issue new shares and sell the ones owned by Export Development Canada and the UAW retiree healthcare trust fund. The IPO will be handled by JPMorgan Chase & Co. and Morgan Stanley.