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GM marks new phase by listing shares again
By Bernard Condon |
November 19, 2010, Friday
|
Print Edition
Print Edition
GENERAL Motors stock began trading on Wall Street again yesterday, signaling the rebirth of an American corporate icon that collapsed into bankruptcy and was rescued with a US$50 billion infusion from taxpayers.
The stock rose sharply in its first minutes of buying and selling, going for nearly US$36 per share - nearly US$3 more than the price GM set for the initial public offering. The stock traded for less than a dollar when the company filed for bankruptcy last year.
On the floor of the New York Stock Exchange, a crowd jostled around the company's trading post, adorned with its familiar blue-square logo with an underlined "GM." Raucous cheers had gone up minutes earlier as CEO Dan Akerson rang the opening bell.
The government hopes that the stock offering will be the first step toward ultimately breaking even on the bailout. For that to happen, the government needs to sell its remaining GM holdings for an average of roughly US$50 a share over the next several years.
In the initial offering, the government reduces its ownership stake from 61 percent to 33 percent. The federal Treasury is unloading more than 400 million shares of the resurrected GM, which is smaller - but cleansed of most of its debt. The company is making money.
New start
"There's a lot of work to do, but today is the beginning of the new company," said Mark Reuss, GM's North American president.
The IPO could wind up as the largest in history. GM raised the initial price to US$33 and increased the number of shares it was offering because investor demand was so high. Counting preferred stock issued by the company, the deal's value could top US$23 billion.
The stock offering is the latest in a series of head-spinning developments over the past two years for an American corporate icon.
In September 2008, to mark its 100th birthday, the auto maker celebrated in the grand three-story atrium on the ground floor of its Detroit headquarters.
Two months later, then-CEO Rick Wagoner found himself in front of members of Congress, begging for money to keep GM alive. Four months after that, he was ousted by President Barack Obama.
By June 2009, GM had filed for bankruptcy. It emerged relieved of most of its debt but mostly owned by the government and saddled with a damaging nickname: "Government Motors." The value of its old stock was wiped out, along with US$27 billion in bond value.
Now GM is a publicly traded firm again. Obama on Wednesday said GM's IPO marks a major milestone not only in the turnaround of the company, but of the auto industry as a whole.
The stock rose sharply in its first minutes of buying and selling, going for nearly US$36 per share - nearly US$3 more than the price GM set for the initial public offering. The stock traded for less than a dollar when the company filed for bankruptcy last year.
On the floor of the New York Stock Exchange, a crowd jostled around the company's trading post, adorned with its familiar blue-square logo with an underlined "GM." Raucous cheers had gone up minutes earlier as CEO Dan Akerson rang the opening bell.
The government hopes that the stock offering will be the first step toward ultimately breaking even on the bailout. For that to happen, the government needs to sell its remaining GM holdings for an average of roughly US$50 a share over the next several years.
In the initial offering, the government reduces its ownership stake from 61 percent to 33 percent. The federal Treasury is unloading more than 400 million shares of the resurrected GM, which is smaller - but cleansed of most of its debt. The company is making money.
New start
"There's a lot of work to do, but today is the beginning of the new company," said Mark Reuss, GM's North American president.
The IPO could wind up as the largest in history. GM raised the initial price to US$33 and increased the number of shares it was offering because investor demand was so high. Counting preferred stock issued by the company, the deal's value could top US$23 billion.
The stock offering is the latest in a series of head-spinning developments over the past two years for an American corporate icon.
In September 2008, to mark its 100th birthday, the auto maker celebrated in the grand three-story atrium on the ground floor of its Detroit headquarters.
Two months later, then-CEO Rick Wagoner found himself in front of members of Congress, begging for money to keep GM alive. Four months after that, he was ousted by President Barack Obama.
By June 2009, GM had filed for bankruptcy. It emerged relieved of most of its debt but mostly owned by the government and saddled with a damaging nickname: "Government Motors." The value of its old stock was wiped out, along with US$27 billion in bond value.
Now GM is a publicly traded firm again. Obama on Wednesday said GM's IPO marks a major milestone not only in the turnaround of the company, but of the auto industry as a whole.
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