GM Generates About $16B in IPO

General Motors enjoyed the most substantial initial public offering the country has seen this year, generating about $16 billion in its much anticipated IPO that launched Thursday morning, according to a NYSE statement.

GM chief executive officer Dan Akerson rang the opening bell of the NYSE, which, in this case, was accompanied by the sound of a 2011 Chevrolet Camaro SS engine revving and tires squealing.

GM stock began selling, and eventually the IPO would reach one of one the highest levels in history.

“General Motors returns to the NYSE as a company with a great global brand and heritage, and a renewed focus on innovation, quality and the customer,” stated Duncan Niederauer, CEO of NYSE Euronext. “We welcome GM to the NYSE, and we are committed to providing the highest levels of market quality and service to the company’s leadership team, employees and shareholders.”

The IPO began selling on the Toronto Stock Exchange on Thursday, as well.

GM had priced the 478 million shares of common stock it issued at $33 per share. There were also 87 million shares of mandatory convertible junior preferred stock that totaled $4.35 billion.

There is a 30-day option for underwriters to buy as many as 71.7 million additional common stock shares and 13 million shares of the preferred stock. The latter would account for over-allotment, if there was any.

GM had estimated the offering to be $20.1 billion, and if underwriters pick up their option, a total of $23.1 billion.

Shortly after the market opened Thursday, Akerson and GM vice chairman and chief financial officer Chris Liddell had a teleconference to discuss the IPO.

Liddell said the company had been speaking with several investors in the last few weeks and had really honed in on three key points.

For starters, the CFO stressed to investors that GM’s profile was very low risk , regarding both cost and balance sheet.

Second, he said: “We believe we’ve got tremendous growth prospects both in mature markets, such as here in North America, but also in emerging markets, like Brazil and China.

“And third, and probably most importantly, we believe in the concept that we have talked about a lot, which is designing, building and selling the world’s best vehicles,” Liddell added.

While he was not able to name any specific mutual funds that bought in, Liddell said during the call that “there was a huge amount of interest both on the retail side and the mutual funds.

“And we saw, essentially, all of the largest mutual funds over the last couple of weeks and I know — at least I think I know — that virtually all of them put orders in and I hope they certainly got an allocation,” he added.

As far as the retail side, GM saw “a very strong retail demand and we were, through the underwriters, very keen to see as much retail participation as we could,” he added.

U.S. government’s share will decrease “not quite by half,” Akerson said. Looking at it on a basic basis, the government’s ownership would drop from just over 60 percent to 33 percent, Liddell explained.

Looking at it on a fully diluted basis and accounting for things like options, the government’s share falls to the 26 percent to 27 percent range, Liddell pointed out.

When asked the potential impact the reduction in the government’s ownership with have on the automaker’s image, Akerson said that considering the “excitement throughout the United States and Canada,” GM having repaid its federal government debt with interest and all the preferred shares to the U.S. government and the fact that the government’s ownership has been reduced, the public reaction would likely be positive.

“I would say that the average taxpayer in the United States would look at this particular transaction as very, very positive and we’re seeing that,” Akerson shared in the conference call Thursday.

“There’s no question Ford took a different path. We arrived at about the same location. We’re both viable, strong competitors with a level playing field,” he continued. “And at this stage of the game, the best car wins.

“We’re going to have to continue to prove ourselves. At the end of the day, the quality of the product, the design of the product will rule in the marketplace. And that’s where we intend to participate,” Akerson added.

When asked if GM would consider debt offering, Liddell said: “Over the short term, we may look to do a small debt offering simply to establish a credit benchmark. But that will be modest, at most … it will be in the context of just providing some more liquidity and moving toward, eventually, the concept of repaying all our debt.

“So, we may take some actions over the next year, but there’s nothing of any significance from a debt point of view that you’re going to see,” he added.

Sharing her perspective, Speaker of the House Nancy Pelosi released a statement Thursday afternoon  that lauded the IPO, calling it a "sign of progress."

"General Motors’ initial public offering is a sign of progress for America’s auto industry, for our nation’s workers, for our manufacturers and our long-term prosperity. In the midst of a severe recession, Congressional Democrats and President Obama took difficult emergency action to rescue American auto companies and strengthen critical pillars of our manufacturing sector, while protecting taxpayers," the statement said.

"Today we have more evidence that those actions are paying off, and the American people are one step closer to being made whole," Pelosi continued.

"Preserving, bolstering and expanding our manufacturing base is central to our economic growth, our national security and our competitiveness on the global stage, and key to establishing America’s manufacturers as centers of innovation," she added. "Democrats’ ‘Make It In America’ strategy rests at the core of our ongoing efforts to create good-paying jobs, invest in a clean energy economy and rebuild our middle class. We know that when we make, grow and build it in America, our country grows stronger; our workers grow more secure; and our nation leads the world economy.

The statement concluded: "I hope GM’s progress spurs leaders on both sides of the aisle to work together to continue investing in our manufacturers, in our workers and in jobs for our middle class."

Also, GM’s Facebook page included quite a bit of reaction to Thursday’s news.  

In a tweet directed toward @GMBlogs and posted on the GM Facebook page, user mp3tricord : “Glad to see GM back. Great opening.”

A post from YouHerevideo read: “Check out how crazy the floor at the NYSE was this morning for GM’s Opening Bell.”

Facebook user Patrick Rummerfield wrote: “To me GM’s product line is impressive! I’ve been waiting for the new IPO; I’m buying as many shares as I can! Santa says there will be a new GM product in the garage by Christmas. Yahooooooooooooo.” 

However, a few negative comments also made its way on the Facebook page.

For instance, Dalton Jenkins wrote, "I miss Pontiac. Worst decision ever."

In other news from the company, GM also said Thursday that it will be opening up all of its U.S. manufacturing plants and Customer Care and Aftersales warehouses to the public.

The automaker indicated that each facility will designate the specific day to hold its respective open house, where consumers will be taught about the inner-workings of GM’s “people, products and plants.” The facilities are hosting their respective communities to demonstrate how partnerships benefit the automaker.

“Thanks to the support we have received from various stakeholder groups, we have a strong U.S. manufacturing footprint that employs thousands of people,” stated Diana Tremblay, who is the vice president of manufacturing and labor relations at GM.

"These open houses are our way of showing our appreciation to the communities where we operate,” Tremblay continued. “Our manufacturing processes and the highly skilled team members who work in the plants and warehouses are an impressive combination that enables us to produce high quality vehicles on a daily basis — a critical factor to any successful business model.”

Joe Ashton, who is vice president of the GM department for the UAW, noted: “I think it’s a great opportunity to see the skill and dedication of our UAW men and women who are proud of their accomplishments in building the finest vehicles not only in this country, but in the world.”

The only plant that has a regularly scheduled tour program is Kentucky’s Bowling Green Assembly Plant, but GM stressed that community, media and school groups can request tours at various facilities throughout the nation. The automaker said the plants will “accommodate as many tour requests as possible.”