DETROIT | Employees, retirees and car dealers will get a chance to buy General Motors stock when it is sold in an initial public offering as early as November.
The company sent letters to workers and dealers in the U.S. and Canada on Oct. 5 telling them how to sign up for the offering on a website. The deadline to register for the sale is Oct. 22.
The letter says employees and dealers will have chance to buy the stock at its offering price, which has not been set. A government watchdog’s estimate is $133 per share. Workers, retirees and dealers must invest more than $1,000 to be able to buy stock, but the minimum and maximum number of shares a person can buy is still being determined, the letter said.
Morgan Stanley Smith Barney LLC is administering the employee stock program.
GM is planning to hold the IPO in mid-November, but no firm date has been set.
The U.S. government owns a 61 percent equity stake in GM, which it got in return for giving GM $50 billion to get through bankruptcy. 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 to recoup the remaining $43 billion.
The letter says no shares can be sold until U.S. and Canadian regulators sign off on the stock sale plan, which is under review. Once regulators accept the plan, GM will go on a two-week worldwide “road show” to officially start wooing larger investors such as mutual, hedge and pension funds.
GM’s old shareholders were wiped out when it went through bankruptcy protection last year after piling up billions in losses. The automaker 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.
The government will sell a portion of its common stock in the IPO. GM will sell preferred shares 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 pension plans currently are $27 billion short of their obligations.
GM will not sell common shares in the IPO.
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