GM workers get chance to buy stock in public sale
DETROIT (AP) -- General Motors' employees, retirees and car dealers will get a chance to invest in their company when the automaker's stock is sold to the public.
GM sent letters to workers and dealers in the U.S. and Canada on Oct. 5 giving them the opportunity to buy shares when the initial public offering takes place. The deadline to register for the sale is Oct. 22.
Employees and dealers will be able to buy the stock at its offering price, which has not been set. A government watchdog's estimate is $133 per share, although the stock will most likely be split and offered at a cheaper price. Workers, retirees and dealers must invest more than $1,000 to buy stock, but the minimum and maximum number of shares a person can buy is still being determined, the letter said.
Like other investors, employees and retirees can sell their shares at any time after GM's stock starts trading in markets. GM has about 600,000 employees and retirees in the U.S and Canada.
The automaker is planning to hold the IPO in mid-November, but no firm date has been set.
News of GM's letter became public on Tuesday, the same day that new GM CEO Dan Akerson met in New York with Treasury Secretary Timothy Geithner. Both men emerged from the meeting in the afternoon without talking to reporters.
The U.S. government is GM's largest owner. It holds a 61 percent equity stake in the company, which it got in return for giving GM $50 billion to get through bankruptcy last year. The government hopes to get its money back by selling shares in the IPO and through several follow-up offerings. GM has repaid the government $6.7 billion, but it may take several years for the government to recoup its remaining $43 billion investment.
GM's other shareholders -- the Canadian and Ontario governments, a union health care trust fund and GM's old bondholders -- also can sell stock in the initial stock sale. Just how many shares each owner intends to sell has not been made public.
The automaker's letter to employees says no shares can be bought or sold until U.S. and Canadian regulators sign off on the stock sale plan, which is under review. Once regulators accept it, GM will go on a two-week worldwide "road show" to officially start wooing larger investors such as mutual, hedge and pension funds.
GM needs to get a strong showing of interest from employees, retirees and dealers to help sell its IPO to big investors as well as individual investors, said Scott Sweet, managing partner of IPO Boutique, a stock offering research firm.
"They can parlay that into a very strong statement that (GM) employees believe in management and the product, and through all that they've gone through, they're still with (the company)," Sweet said.
GM employees will probably have to pay the entire amount of their IPO investment about the time of the sale, Sweet said.
The government likely will sell a small portion of its shares at first, hoping that GM will keep making money and the stock price will rise ahead of subsequent sales.
In New York on Tuesday, Geithner and Akerson left their meeting at the Federal Reserve Bank of New York just before 3 p.m., steering clear of reporters assembled outside.
Ron Bloom, the Obama administration's senior counselor for manufacturing policy, also left the building around the same time.
The Treasury Department said Akerson and Geithner met for the first time at GM's request. Both Treasury and GM said there would be no comment after the meeting.
It's likely the men discussed the size of the initial public offering and how much common stock the government wants to sell in November.
Ed Whitacre, GM's chairman and former CEO, has said the company needs to shed government ownership quickly. The bailout and derogatory "Government Motors" moniker are hurting the company's sales and image, he has said.
Akerson, who took over leadership of the company from Whitacre on Sept. 1, has said it could take a couple of years to sell all the stock. A relatively small initial sale is likely, $10 billion or less.
GM will not sell common shares, but it plans to offer preferred stock to raise money for pension payments and to retire debt. Preferred shares behave like bonds because they pay a set dividend. They will be converted to common shares in 2013.
GM's old shareholders were wiped out when it went through bankruptcy protection last year after piling up billions in losses. The automaker has shed much of its debt and old factories. The new GM earned $2.2 billion in the first half of the year and is expected to have a profitable third quarter.
Still, problems remain. GM's pension plans currently are $27 billion short of their obligations.
Thomas reported from Washington. AP Auto Writer Dan Strumpf contributed to this report from New York.