General Motors has reversed course and now says it will release financial data when it emerges from bankruptcy as a privately-held company.
General Motors officials beat a hasty retreat on comments made by Chief Financial Officer Ray Young the day after the automaker filed for bankruptcy, early this week, saying they intend to be “transparent” when it comes to the corporation’s financial results.
During a Monday news conference detailing the bankruptcy filing, GM Chief Executive Office Fritz Henderson pointedly promised to maintain a high degree of transparency, in light of the interest in the company’s promised turnaround – and the $50 billion in public funds that were being invested in that effort. But a day later, CFO Young seemed to belie that, warning that when it emerged from its Chapter 11 filing, GM would offer no more data to the public than any other privately-held company.
“As a privately held corporation,” he said, “We’ll probably not disclose (financial) information except to the shareholders,” a group that happens to include American taxpayers, who, through the U.S. Treasury Dept. will initially hold a 60% stake in the “new” GM, with the rest divided up among a union health care fund, former bondholders, and both the Canadian and Ontario governments.
Young’s comments triggered a flurry of angry criticism, much of it pointing to the fact that the public, in fact, makes up the largest group of shareholders, and thus it would be common sense, if not an outright requirement, to issue financial updates.
The automaker now says that will happen, issuing a statement that, “New GM intends to make regular disclosures during the period it is private in order to provide appropriate information regarding our financial conditions.”
In his own comments on the GM bankruptcy, on Monday, President Obama stressed that the government intends to remain a shareholder for as short a period as possible, a position echoed by various GM officials since then. But how quickly the U.S. (and Canadian and Ontario governments) will exit is uncertain.
For his part, CFO Young indicated that preparations for an Initial Public Offering, or IPO, probably wouldn’t begin until “the first or second quarter of 2010.” And Wall Street expects caution that actually putting GM stock back on the market could take months longer, perhaps even stretch the process well into 2011.
And even then, the various government stakeholders wouldn’t be rushing to tender their shares on the new GM’s first day on the New York Stock Exchange. They would almost certainly want “an orderly sell-down,” stressed Young, “to maximize the value to taxpayers.”