DETROIT -- General Motors Co. on Wednesday filed the first batch of paperwork required to sell stock to the public, a significant step toward shedding government ownership.
The 700-page filing with regulators begins a process that will lead to an initial public offering of GM's stock. The paperwork laid out reasons why GM would be attractive to investors, as well as the risks the company faces.
GM didn't say how many shares would be sold or when, although experts say the IPO could come as early as October. It also didn't say how many shares GM's majority owner, the U.S. government, plans to sell. Those sales would eventually lead to the government shrinking its big stake in the automaker, something GM is eager to see. The company's outgoing CEO, Ed Whitacre, has said government ownership has hurt GM's public image and sales.
GM said its stakeholders initially will sell common stock, while GM will sell preferred shares, which are like bonds and include dividend payments. GM said it will use proceeds from the preferred stock sale for general corporate purposes. It offered few other details.
The U.S. government now owns about 61 percent of GM, which it got in exchange for giving the company $50 billion in survival aid last year. GM has repaid $6.7 billion, and the remaining $43.3 billion was converted to the ownership stake.
Other stakeholders include a United Auto Workers health-care trust and the Canadian government.
Demand for GM's new shares isn't known. In the coming weeks, the company will pitch itself to big investors such pension, mutual and hedge funds. Many of the shares will go to those larger investors, but small players will also get a chance to buy in. With so much taxpayer money at stake, there's interest in seeing GM's stock price rise.
There are risks. The IPO market is weak. And GM, which lost about $100 billion in the five years leading up to last year's bankruptcy, is hardly a sure bet.
Still, a quick run through bankruptcy court cleansed GM of burdensome debt. It closed 12 factories and its labor costs were cut dramatically through deals with the United Auto Workers union.
Helped by those cost cuts, GM earned a healthy $2.2 billion in the first half of this year despite depressed U.S. auto sales. It's set up to do better if sales rebound, especially in fast-growing countries like Brazil and China, where GM plans to launch nearly 20 vehicles in the next two years.
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