Why is this man smiling? Outgoing GM Chairman Ed Whitacre predicts a successful GM IPO - and sends the automaker scrambling.
Comments by General Motors Chairman and former CEO Ed Whitacre offer an insight into the maker’s planned IPO – but have sent the maker scrambling to avert a potential problem with federal regulators.
The Texas executive, now winding down the role he took as GM emerged from bankruptcy last year, suggested the maker would offer shares for somewhere between $20 and $25 when it stages its long-anticipated initial public offering late next month. That and other comments by Whitacre could create a legal nightmare for GM because it is in the middle of the so-called “quiet period” between the filing for an IPO and the actual stock sale.
In an updated filing with the Securities and Exchange Commission, GM tried to avert any problems by saying it has neither set a price for the planned share offering, nor has a specific timeline in mind for setting share prices.
But Whitacre may have let the proverbial cat out of the bag, last week, when he spoke at a business meeting in Texas. Approached by the Reuter’s news service, Whitacre said that while it’s still early, he expects to see GM shares priced “in the $20 range…$20, $25, something like that would be my guess.”
The former AT&T boss then predicted “we’ll have a successful IPO sometime in November.” While most observers do, indeed, expect the offering to take place in the latter half of the coming month GM has to date declined to announce when the stock sale will be scheduled.
Whitacre also said he expects the IPO to reduce the U.S. Treasury’s 61% stake in GM – no surprise as the White House has reportedly been applying heavy pressure to get its shares sold off as soon as possible.
Initial analysis indicated the GM IPO would have to sell shares at somewhere around $135 to allow the government to recoup the taxpayers’ investment. The Treasury holds 304 million shares of common stock and another $2.1 billion in preferred shares.
But it appears GM will – as TheDetroitBureau.com previously reported – split shares, probably 4-to-1, to make them more affordable.
New GM CEO Dan Akerson is working to bring onboard investors who will help prop up the IPO. He has targeted not only key U.S. banks and investment firms but potential investors from abroad, including those in the Mideast and China. Last week, the chairman of SAIC, the Shanghai maker that has partnered with GM for 13 years, indicated his company may go ahead and support the IPO. (Click Here for that story.)
But in an amended filing with the SEC, GM took pains to downplay the comments made by Whitacre, stating the outgoing chairman’s comments, “were not intended and should not be considered offering material.”