GM makes historic return to NYSE today

Associated Press

DETROIT

The last time General Motors threw a big party was two years ago, for its 100th birthday. Two months later, its CEO was before Congress, begging for bailout money. Now GM is getting ready for another celebration — this time for its future.

GM will be reborn as a public company today with a stock offering, ending the government’s role as majority shareholder and closing a remarkable chapter in American corporate history.

The U.S. government should make about $13.6 billion when GM shares start trading on the New York Stock Exchange. The federal Treasury is unloading more than 400 million shares of GM, reducing its stake in the company from 61 percent to about 33 percent.

The IPO will wind up as the fifth-largest in American history. Investor demand is already so high that the company raised both the number of shares it will offer and the range for the initial price. GM set a price of $33 per common share Wednesday. When the U.S. government and other owners sell those shares, they’ll raise $18.2 billion in the stock sale. GM will raise $5 billion by selling 100 million preferred shares at $50 each. Together, the sale of common and preferred stock will bring the deal’s value to $23.2 billion.

The stock offering is the latest in a series of head-spinning developments over the past two years for an American corporate icon.

In September 2008, to mark the beginning of its second century, the automaker celebrated in the grand three-story atrium on the ground floor of its Detroit headquarters. GM had seen a lot of changes in its 100 years, said then-CEO Rick Wagoner.

“In fact, it’s changed a lot in the last 100 hours,” he said, referring to the banking crisis, which was just starting to unfold. Two months later, Wagoner found himself in front of members of Congress, begging for money to keep GM alive. Four months after that, he was ousted by President Barack Obama.

By June 2009, GM had filed for bankruptcy. It emerged relieved of most of its debt but mostly owned by the government and saddled with a damaging nickname: “Government Motors.” The value of its old stock was wiped out, along with $27 billion in bond value.

Now GM will become a publicly traded company again and revive the stock symbol “GM.” Dan Akerson, GM’s fourth CEO in two years, will ring the opening bell today on the New York Stock Exchange, to celebrate the company’s rebirth.

“This is an extraordinarily important moment in the life of GM, along with emerging from bankruptcy,” says Steve Rattner, who headed up Obama’s auto task force for several months. “It’s not the end of the story of government involvement in GM, but it is a critically important step forward.”

Most of the new stock will go to institutional investors, not to everyday investors, following a Wall Street system that rewards investment banks’ big customers. GM will set aside 5 percent of its new stock for employees, retirees and car dealers to buy at the offering price. The deadline to sign up was Oct. 22, but the company has not revealed how many people took the offer.

In the stock offering, the government stands to make $13.6 billion if it sells 412 million shares, as planned, for $33 apiece.