GM IPO Underscores Company’s Resolve
Quick! What unflattering label haunting General Motors is the company trying to lose? That would be Government Motors, a term coined by some following the Obama Administration-led bankruptcy filing on June 1, 2009.
Though GM quickly emerged from bankruptcy mere weeks later, their survival came at the expense of American and Canadian taxpayers whose governments poured more than $50 billion into the automaker in order to save it. Those monies plus a loan that has already been paid off by GM comprised a historic bail out of what still is one of the largest companies in the world.
|
Ever since restructuring, GM has been on a mad dash to remake itself and, apparently, is doing a good job of it. Cadillac, Buick, GMC and Chevrolet are the four remaining US brands with Saab sold and Hummer, Pontiac and Saturn retired. Of course, shareholders of the old GM have been left with worthless stock, seeing their once lofty investments turn to dust.
GM finds itself in a very uncomfortable position, thus its plan for an Initial Public Offering (IPO) of stock in order to raise $12-16 billion. On the one hand, the company is grateful that President Obama stepped in to save it. On the other hand, Obama’s poll ratings have tanked and this election cycle promises a power shift to the right.
Put off the IPO until next year and an emboldened Congress could put GM in an uncomfortable spotlight. GM is desperate to sell its cars and lose its government dependency label. Though the IPO won’t erase that label entirely, it should help GM demonstrate that it is a private corporation and an important contributor to American (and Canadian) manufacturing.
GM also needs to get this stock offering going sooner rather than later as the economy threatens to retreat once again into a recession. The official unemployment figure is 9.5 percent, but that number does not include people who have stopped looking for work or others forced to work part-time until something better comes along.
GM also knows that the current 11 million annual U.S. car sales are a far cry from the 16-17 million units pushed in recent years, which means that the automaker must find a way to stay profitable with less. The automaker has proven that it is viable even during challenging times, an important edge GM does not want to lose.
GM stock, anyone?
Related Reading
Fortune: GM’s IPO: High Hopes and Deep Fears
The Wall Street Journal: Successful GM IPO Won’t Be Enough To Rev Up Entire Market
[...] This post was mentioned on Twitter by Matt Keegan, TheAutoWriter.Com. TheAutoWriter.Com said: GM #IPO Underscores Company's Resolve: http://su.pr/1o1fWn #GM #stock [...]