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GM Beats Analyst Expectations With First Profit Since 2004

“We still have a lot to do,” says CEO Akerson.

by on Feb.24, 2011

Still plenty to do, said CEO Akerson, despite GM's first reported yearly profit since 2004.

General Motors Corp. made a profit of $4.7 billion during 2010, including $500 million in net income during the fourth quarter despite a 25% drop in earnings from its Asian operations and continuing losses in its struggling European automotive business.

GM also confirmed Thursday it will distribute a record profit sharing checks averaging $4,300 to 45,000 hourly workers in the United States. The payments, which will cost the GM about $189 million, are substantially larger any GM has distributed to workers since profit sharing was first included in its union contract in 1982.

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“Last year was one of foundation building,” Dan Akerson, chairman and chief executive officer, said, adding that, “Particularly pleasing was that we demonstrated GM’s ability to achieve sustainable profitability near the bottom of the U.S. industry cycle, with four consecutive profitable quarters.

It was the first time GM was profitable during all four quarters of the calendar year since 2004.  The maker subsequently ran up about $80 billion in losses before plunging into bankruptcy in May 2009.  It emerged from Chapter 11 protection two months later, but only after receiving $49.5 billion in federal assistance.

“We know we still have a lot to do,” Akerson said Thursday during a conference call with analysts and reporters.

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General Motors IPO Now Could Be Largest-Ever

On track to raise as much as $23 billion.

by on Nov.18, 2010

Judgment day on Wall Street for GM.

General Motors’ eagerly-awaited Initial Public Offering is now on track to be the largest first-time stock sale in history.

The maker, which only emerged from Chapter 11 protection 16 months ago, now estimates the public offering of common and convertible junior preferred stock will raise between $20.1 billion and $23.1 billion if the underwriters’ over-allotment options are fully exercised.

“As we prepare to enter the equity markets, all of us at GM are excited about this historic milestone.  We are especially appreciative of those who stood by us through the toughest times, and we are dedicated to creating value for all of our stakeholders,” proclaimed GM Vice Chairman and Chief Financial Officer Chris Liddell, finally breaking the SEC-imposed silence hours before the maker’s stock offering was set to go on Thursday.
Initially taking a conservative approach, GM intended to price the opening shares at $26 to $29 – even then exceeding the guess of its more conservative underwriters.  That would have raised between $10 billion and $12 billion, with the U.S. Treasury – the largest stakeholder – reducing its holdings from 60.1% to around 40%.

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But going into the final days before the IPO it became clear demand had far exceeded expectations, leading GM and the government to agree to expand the number of shares on the block by a third – to 478 million – and at a boost price of $32 to $33 each.

The mandatory convertible junior preferred stock portion of the offering, intended to raise cash for GM itself, was bumped up from 60 million to 80 million shares.

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CEO Akerson Leaves IPO Shrouded In Secrecy

But maker clearly taking steps towards stock sale.

by on Oct.29, 2010

GM will invest $190 million at the Cadillac plant, in Lansing, Michigan, to launch production of a new small luxury car.

All signs point towards the upcoming General Motors IPO, but the planned General Motors stock offering remains shrouded in secrecy.

Though GM announced plans to reduce its debt by $11 billion on Wednesday (Click Here for more) chief executive Dan Akerson pointedly ducked questions on speculation GM will wrap up its initial public offering of stock by mid-November.

Akerson remained “on message,” as his public relations handlers might have described it, focusing on the announcement of a new Cadillac model and refusing to talk not only about the IPO but also about GM’s third quarter financial report.

Nonetheless, the maker’s anticipated July – September profit, which would be its third quarterly earnings report to show black ink, is widely anticipated to be the finally piece of the jigsaw puzzle that will trigger GM’s long-awaited return as a publicly-traded company.

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Former Obama administration auto czar Steve Rattner, in the midst of a tour to promote his book on last year’s GM and Chrysler bailouts, said recently that he expects GM to launch the IPO on November 17.

“I’m not going to comment on the IPO,” said Akerson, while surrounded by reporters following the announcement GM plans to spend $190 million for new tooling and equipment for a new small car project at the Grand River Assembly plant in Lansing, Michigan.

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GM Reducing Leverage By $11 Billion

Actions should save $500 mil in annual interest – and enhance appeal of IPO.

by on Oct.28, 2010

The General continues prepping for its IPO.

In a series of actions clearly designed to improve the maker’s balance sheet in advance of its planned IPO, General Motors has announced it will reduce debt and improve its pension funding position by a total of $11 billion — reducing annual costs by $500 million, in the process.

While GM has yet to provide details of its planned stock offering, company insiders make no secret of the need to present as positive a picture as possible if investors are to come up with the billions needed to begin paying back the federal bailout that pulled the maker out of bankruptcy last year.

Among the most significant steps GM announced today, it will repay $2.8 billion to the retiree medical trust run by the United Auto Workers Union, a move that will result in a $200 million non-cash gain in the fourth quarter of this year.

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It will complete a $5 billion “revolver,” or revolving credit line with a syndicate of banks.  Though the maker claims it does not plan to tap the line, it provides a back-up source of liquidity, something potentially quite useful considering the uncertain economy.

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The Four Stumbles On The Road To GM’s IPO

How an 800-pound gorilla came on hard times.

by on Aug.20, 2010

It was a long road to Chapter 11...and the upcoming IPO.

Note: This is the kind of column our friend Jerry Flint might have written, though his would have been far more irreverent, eloquent and passionate.  We’ll miss you, Jerry. (Click Here for a remembrance of Jerry Flint.)

I was at a luncheon of dinosaurs the other day, perhaps I should say for dinosaurs, retired auto industry top-drawers, and happened to be sitting next to a one-time GM executive who shall be nameless.

Naturally, we got to talking about GM’s Government Motors status, its rapid CEO turnover and the impending new Initial Public Offering of stock.  This won’t really be GM’s first offering of stock, since founder Billy Durant wheeled and dealed for financing and takeovers back in the early years of the last century—but rarely if ever approached the general public.

Anyway, our conversation turned to how the 800-pound Gorilla of Detroit automakers came to such hard times.  We agreed it wasn’t from excessive costs running the company into bankruptcy two years ago, or even from import and transplant automakers gnawing away at market share from behind their protected home markets over the last couple of decades.

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We identified four basic long-ago GM stumbles that eventually led to its falling flat on its keister, as the Great Communicator used to say.  Here I’ll share them with you, for other dinosaurs to debate endlessly, or perhaps to simply nod their heads in agreement:

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Unpleasant Surprises Lurking in GM IPO Filing

Significant debt may have been left behind after bankruptcy.

by on Aug.20, 2010

General Motor's Renaissance Center headquarters, in downtown Detroit.

As General Motors prepares to launch its critical rebirth as a public company the papers it filed with federal regulators, this week, reveal last year’s bankruptcy didn’t solve all of the maker’s financial woes in its home market.

In the S1 form the maker filed with the U.S, Securities Exchange Commission, this week, GM disclosed its U.S. Hourly Pension Fund is underfunded by more than $17.1 billion. In addition, the company potentially could owe even more money to the Voluntary Employees Benefit Association, or VEBA, controlled by the United Auto Workers, GM said.

The company’s pension funds have historically been “well managed and even had surplus cash between 2005 and 2007,” it claimed in the filing for its planned IPO.  But a host of factors, in the wake of the financial crisis in 2008 and 2009, have resulted in a decline in assets, according  to the documents filed with the SEC.

GM cautioned that, “Our U.S. defined benefit pension plans are currently underfunded, and our pension funding obligations may increase significantly due to weak performance of financial markets and its effect on plan assets. The GM Pension plans, also have been hurt by the prevailing low interest rates.”

GM also owes another $10 billion to its non-U.S. pension fund, according to the S1.

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The disclosures about the pension fund were included in the long list of potential problems the automaker listed inside the lengthy and complicated S1 to alert investors to the fact that shares in the new GM could be a risky investment.

Recession, a drop in the company’s cash flow or financial difficulties at key suppliers and partners also are serious threats, according to the documents.

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“Government Motors” Ready For Its IPO

But GM still not revealing date of stock sale, nor price.

by on Aug.18, 2010

Why is this man smiling? Whitacre announces the GM IPO but hands the difficult work to his successor.

GM is taking the first crucial step to get the government out of what critics have dubbed Government Motors.  Just moments before the final bell rang on Wall Street, the automaker announced it had filed registration papers with the Securities and Exchange Commission.

The maker plans to offer investors both common and preferred Class B shares as part of a gradual sell-off of the more than 350 million shares – equally to 60.8% of GM equity – now held by the U.S. Treasury.  The company also plans to begin selling off the stake held by the Canadian and Ontario governments and will be listed on both the New York and Toronto Stock Exchanges following the IPO.

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Breaking News!

GM management has come under heavy pressure from the White House to stage the Initial Public Offering, the only way the White House can recover more than $40 billion invested by U.S. taxpayers following the maker’s 2009 bankruptcy.  But company officials had, until today, refused to lock down a specific date for the offering – which many anticipated would be staged in advance of the upcoming mid-term Congressional elections.

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Breaking News: GM Finally Files For IPO

by on Aug.18, 2010

The first step is taken to get the Government out of Government Motors.

Just moments before Wall Street called it a day, Wednesday afternoon, General Motors announced it was filing its much-anticipated and unexpectedly delayed IPO.

The move, which must still be formally approved by the Securities and Exchange Commission, as well as Canadian regulators, will begin the process of selling off the majority 60.8% stake in the troubled automaker held by the U.S. Treasury – as well as a chunk of stock now in the hands of the Canadian and Ontario governments, which also helped bail out GM as it emerged from bankruptcy last year.

The big question is whether investors on Wall Street and the Toronto stock exchange will respond favorably to the offering, the only way the three government bodies will be able to recover the tens of billions of dollars invested by taxpayers to prop up the reborn GM.

TheDetroitBureau.com will have further updates shortly.

Expected GM IPO Likely Delayed Until Next Week

Sources say automaker had wanted to file today to take advantage of positive earnings news.

by on Aug.13, 2010

Big Ed heads back to Texas with millions of taxpayer dollars coming his way.

General Motors will likely delay the filing of its much-anticipated Initial Public Offering until early next week, according to numerous un-sourced media reports.

Several media outlets reported that the IPO filing, which had been expected Friday so it would follow Thursday’s announcement of GM’s big 2nd-Quarter profit, was delayed because of the allegedly sudden departure of Chairman and CEO Ed Whitacre.

Whitacre announced Thursday that he would step down as CEO on Sept first, but would remain as chairman through the end of the year. (See Ken Zino’s GM Q2 Results Tomorrow. IPO Filing Friday?, GM Posts a $14 billion Q2 Turnaround, GM CEO Whitacre Steps Down in September!)

“We’re not commenting on anything regarding the IPO,” the spokeswoman, predictably,  said.

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Dan Akerson, an outsider who joined the GM board in July 2009, will take over for Whitacre.

Whitacre said at the Management Briefing Seminars in Traverse City last week that the IPO is a very complicated and inches-thick document but the only time frame he would give at the time was as soon as possible.

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GM’s Whitacre Wants To Sell Off Government’s Stake ASAP

But CEO won’t discuss timetable for IPO.

by on Aug.05, 2010

GM wants to sell off the government's 61% stake "as soon as possible," says CEO Ed Whitacre.

General Motors is working on its initial public offering, but the only timeframe Chairman and President Ed Whitacre would offer for the IPO, during an appearance Thursday, was “as soon as possible,” in his latest non-news statement.
“It’s number one on our list,” Whitacre, who also serves as GM’s chief executive officer, told the Management Briefing Seminars in Traverse City.  “We don’t like this label of ‘Government Motors.’ It turns customers off and it turns us off.”

Late last month, rumors began to circulate that GM would set out details of his planned stock offering around August 16th, following the release of its second-quarter earnings – about which Vice Chairman Steve Girsky today said analysts would be “encouraged.”

It is anticipated that the offering will be timed just before the upcoming mid-term Congressional elections, though neither Girsky nor Whitacre would confirm that timing. Ruling Congressional Democrats, along with incumbent Republicans face the wrath of voters this fall.

Following his speech at the annual industry confab, Whitacre told reporters that GM must file a massive application with the Securities Exchange Commission, something it is now working on.  But when GM does issue its IPO, Whitacre said he doesn’t expect any backlash as an automotive stock.

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“I think the appetite in the marketplace is going to be really good for GM stock,” he said. In fact, he added, some analysts said the automaker’s IPO could be the biggest ever.

When the stock does go public, Whitacre said he hopes that the government will be completely removed from any significant GM ownership.

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