Preparing to cut its ties to the U.S. government, General Motors filed registration papers for an initial public offering Wednesday. The company just reported a stellar second quarter and optimism is running high. The Detroit Free Press hailed GM as "back -- officially, now." While the company still faces a number of obstacles, its prospects have dramatically improved in the last 14 months. Here's what the IPO means for the company:
Investors Are Excited, writes Portfolio: "The IPO is expected to generate a lot of interest from investors, particularly as the new GM seems to be financially stable, looking for a profit for the full year after posting more than $2 billion in profit for the first six months of this year. GM said it ended the second quarter with $32.5 billion in cash and marketable securities, including funds in the Canadian Health Care Trust escrow. Production was up 46 percent for the automaker, with 2.2 million units produced worldwide in the quarter, a boost from the 1.5 million units produced by the old GM for the same period last year."
What the IPO Will Accomplish The Detroit Free Press editorial board is optimistic: "One of the goals of this IPO is to reduce the government's stake in GM below 50% and accelerate the rate at which the U.S. Treasury recoups its $50-billion investment in keeping the company afloat in 2009. The rest of the cash will also make GM healthier and more flexible, qualities it will need to sustain its current momentum. But the IPO's most important value, at least around here, is not in the dollars, but in the feelings of relief and optimism, if not outright elation. There will be just one thing left to do when the shares hit the stock exchanges: Buy some."
Good News for Taxpayers, writes Tom Taulli at Daily Finance: " The presumption is that GM will raise as much as $20 billion. This will be good news for U.S. taxpayers, since the federal government owns a hefty 61% stake in the automaker. Uncle Sam plans to sell roughly a fifth of its 304 million shares. It also looks like the United Auto Workers union will sell a portion of its 17.5% equity stake."