UPDATE 10-GM files for IPO, plans dual listing

* GM seen raising $15 bln to $20 bln in landmark deal

* U.S. Treasury expected to shift to minority GM stake

* IPO follows CEO shake-up, biggest profit in six years

* GM plans listing on NYSE and Toronto Stock Exchange

* Morgan Stanley, JPMorgan, BofA, Citi lead underwriters

(Rewrites, adds analyst’s remarks)

By Clare Baldwin and David Bailey

NEW YORK/DETROIT, Aug 18 (BestGrowthStock) – General Motors Co
[GM.UL] took a big step toward repaying a controversial
taxpayer-funded bailout by declaring plans for a landmark stock
offering that represents a critical test for the Obama
administration.

The automaker said it planned to list the shares on the New
York Stock Exchange and the Toronto Stock Exchange in an
initial public offering that comes amid a still-weak global
market for cars that is vulnerable to a further downturn.

The Obama administration wants to be able to cast its $50
billion GM bailout as a financial success in the face of public
skepticism and Republican political opposition but some
analysts are still wary of the offering.

GM’s IPO could be the biggest since Visa Inc’s (V.N: ) $19.7
billion March 2008 offering, and could raise up to $20 billion,
though analysts cautioned that its size depends on
still-untested investor demand for a restructured automaker
with only two consecutive quarters of profits.

GM’s initial filing with U.S. securities regulators did not
say how many shares would be sold or give an expected price range
for the IPO.

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Take a Look on GM IPO [ID:nN11242039]

BREAKINGVIEWS column on GM [ID:nN18204173]

Graphic on GM IPO:

http://link.reuters.com/vex84n

Reuters Insider show on GM IPO:

http://link.reuters.com/kew75n

INSTANT VIEW 11-GM files for landmark IPO [ID:nN1615887]

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“We’re looking at a second half that is potentially weaker
than the first half,” said Dennis Virag, president of
Automotive Consulting Group. “That could certainly hurt the
sale of the shares.”

“I don’t think this is a good time to be going public,”
Virag said. “It’s more political than practical.”

Trading in GM shares is expected to start between late
October and the U.S. Thanksgiving holiday on Nov. 25, according
to people involved in the process. A stock offering in late
October would mean trading would start just before the November
congressional elections.

Government officials and GM executives have repeatedly
denied any link with the elections.

The 102-year-old onetime blue chip is expected to return to
the NYSE under the “GM” ticker symbol it had before the
government-funded bankruptcy.

Adding a stock listing in Toronto underscores the role the
governments of Canada and Ontario played as junior partners to
the U.S. Treasury in keeping GM from liquidation.

The long-running confidential preparations for the IPO were
dubbed “Project Dawn” by the group of bankers, Treasury
officials and GM executives led by Chief Financial Officer
Chris Liddell.

GM Chief Executive Ed Whitacre, who steps down at the start
of September, has said the automaker needs to distance itself
from government ownership and the label “Government Motors” to
build momentum in its turnaround.

“I just think that the risk of failure with the IPO is
bigger than the risk of being known as Government Motors,” said
Brad Coulter, a restructuring specialist at O’Keefe &
Associates.

PART OF IPO TO RAISE CAPITAL

The U.S. Treasury said it would not include any of its
preferred shares in the IPO and did not indicate how long it would
take to shed its stake.

The Treasury plans to sell about 20 percent of the 304 million
common GM shares it holds, reducing its stake in the top U.S.
automaker to under 50 percent, sources have said.

GM does not plan to sell new common stock in the IPO but
plans to issue preferred stock that would generate proceeds for
the automaker. Such an offering is a less-risky form of equity
that could attract dividend and growth fund investors.

Although bankruptcy eliminated about $40 billion in
unsecured debt and other obligations for GM, the automaker
still needs funds to restructure its money-losing Opel unit in
Europe and address a pension shortfall of about $26 billion.

GM has posted two consecutive quarters of profit after
slashing costs and debt in bankruptcy and dropping the Pontiac,
Saab, Hummer and Saturn brands.

The U.S. government currently owns almost 61 percent of GM
after converting $43 billion of the $50 billion in funding to
the automaker into equity.

TAXPAYERS MADE WHOLE?

The total value of the GM stock offering would be critical.
For U.S. taxpayers to recover the $43 billion invested in GM,
the market value of the automaker would have to be near $70
billion.

After the offering, the U.S. Treasury and Canada will no
longer have the right to designate board nominees. Treasury
named four directors in July 2009, including Dan Akerson, who
was named as Whitacre’s replacement earlier in August.
[ID:nN12271372]

However, GM also said the U.S. Treasury would continue to
influence executive appointments and compensation, its business
strategy, employee and union decisions and debt and equity
issuances after the IPO.

GM said risks for potential investors included a still-weak
global market for cars that could be vulnerable to a further
downturn and the pressure it faces to roll out new models after
cutting back on development spending in recent years.

Borrowing a page from the turnaround strategy that helped
lift Ford Motor Co (F.N: ), GM said in its filing that it aimed
to shift more than half of sales volume to global platforms by
2014.

That would mark an increase from about 17 percent now and
allow GM to slash costs and reduce complexity in its
manufacturing operations.

Republican Senator Charles Grassley has asked a special
Treasury Department watchdog for an analysis of the GM IPO and
how much money would be returned to taxpayers.

Bankers and credit analysts have offered a case for valuing
GM as high as $80 billion, given projections from expected 2011
cash flow and comparisons with rival Ford.

Ford, the only U.S. automaker to have avoided bankruptcy,
has a market capitalization of just over $40 billion. Japan’s
Toyota Motor Corp (7203.T: ) (TM.N: ), which tops GM in global
sales, has a value of about $121 billion.

PROBLEMS TO COME

Analysts see GM as being in the early stages of a
turnaround, helped by sharply lower costs, recovering sales in
the United States and growth in overseas markets, led by
China.

Despite the company’s progress, it still faces hurdles
restructuring its money-losing Opel unit, which is struggling in a
slack European auto market.

GM’s 8.375 percent bonds due in 2033 were little changed
after the filing at 35.375 cents on the dollar, according to
MarketAxess data.

Those bonds issued by the pre-bankruptcy GM are being
traded as a speculative play on the equity in the post-IPO GM.
Bondholders who had been owed $27 billion received a 10 percent
equity stake in the restructured GM through the bankruptcy.

Morgan Stanley (MS.N: ) (Read more about the money market today. ), JPMorgan (JPM.N: ), Bank of America
Merrill Lynch (BAC.N: ) and Citigroup Inc (C.N: ) have been
selected as the lead underwriters for what is expected to be
one of the biggest global IPOs.
(Reporting by Clare Baldwin in New York and David Bailey and
Kevin Krolicki in Detroit, additional reporting by Ben Klayman,
Bernie Woodall, Soyoung Kim, Rodrigo Campos, Dena Aubin, Chuck
Mikolajczak, Jonathan Spicer, Liana B. Baker, Jennifer Kwan,
John Crawley, Dan Wilchins and Walden Siew; editing by John
Wallace, Matthew Lewis, Gerald E. McCormick and Phil Berlowitz)

UPDATE 10-GM files for IPO, plans dual listing