It’s Official: GM Commences $13 Billion IPO
DETROIT -
On Wednesday General Motors officially commenced its initial public offering in the amount of $13 billion.
Rumors and speculation flew all week as to whether the move would come and just how much the IPO would be. Turns out, the company kicked off its IPO just at about the time it announced its preliminary third-quarter results. And the announcement came just one day after elections throughout the nation.
The offering will consist of 365 million shares of common stock to be sold by certain of its stockholders. The company also said it will issue 60 million shares of its Series B mandatory convertible junior preferred stock with a liquidation amount of $50 per share.
GM estimates the price range for the offering of common stock is $26 to $29 per share.
Unless converted earlier at the option of the holder, each share of the Series B preferred stock will automatically convert on the mandatory conversion date, which is expected to be three years from the original issue date. The conversion provisions depend on the applicable market value of the company’s common stock, and are subject to certain anti-dilution adjustments, according to the company.
The underwriters have the option to purchase from the selling stockholders up to an additional 54.75 million shares of common stock and from the company an additional 9 million shares of Series B preferred stock, on the same terms and conditions, to cover the over-allotments, if any, GM reported.
Morgan Stanley and J.P. Morgan (representatives of the underwriters), Bank of America Merrill Lynch, Citi, Goldman, Sachs & Co., Barclays Capital, Credit Suisse, Deutsche Bank Securities and RBC Capital Markets will be the joint book-running managers for the offering.
Copies of the preliminary prospectus relating to the offering may be obtained for free, by visiting the SEC website at http://www.sec.gov. Alternatively, GM says individuals may obtain a copy of the preliminary prospectus by contacting:
—Morgan Stanley & Co. Incorporated, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, New York 10014, telephone 1-866-718-1649, or by sending e-mail to prospectus@morganstanley.com
—J.P. Morgan Securities LLC, Attention: Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, telephone 1-866-803-9204
“A registration statement relating to these securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective,” GM concluded.
Preliminary GM Results
For its third quarter, the company expects to generate revenue of about $34 billion and net income attributable to common stockholders of $1.9 to $2.1 billion. Earnings before interest and taxes are expected to come in at $2.2 to $2.4 billion.
For the first nine months of the year, GM is estimates revenue of $99 billion and net income attributable to common stockholders of $4 to $4.2 billion. Earnings before interest and taxes are anticipated to come at $6 billion to $6.2 billion.
While GM said it expects to generate positive EBIT in the fourth quarter as well, it will be at a significantly lower run rate than each of the first three quarters. GM reported that this is due to the fourth quarter having a different product mix, new-vehicle launch costs, such as the Chevrolet Cruze and Volt, and higher engineering expenses for future products.
“We are extremely pleased with the level of progress the company is making,” said Chris Liddell, GM vice chairman and chief financial officer. “We will deliver a solid and profitable first year post-bankruptcy, and we are continuing to improve our balance sheet and most importantly, the quality of our vehicles.”