Ron Bloom, the head of the White House automotive task force, reiterated the government's desire to reduce its majority stake in General Motors Co., telling Reuters
the automaker could launch an initial public offering before the end of 2010.
But the emphasis is on the word "could," as Bloom also echoed remarks made earlier this month by GM chairman Ed Whitacre that the company's primary focus right now is paying off debts owed to the government. "Ed said that he thought the company ought to be focused on making money and paying us back and not particularly on the IPO. The IPO is a consequence, not a cause," Bloom said.
Indeed, GM has a long way to go before it can even consider turning to public markets. The automaker emerged from a government-assisted Chapter 11 reorganization back in July and is currently laboring through the process of revaluing its balance sheet. The company said it does not expect to be able to release full-year 2009 results until at least March due to the complexity of its accounting overhaul.
There is also the little matter of profitability to be considered. GM did boast positive cash flow on a non-GAAP basis in the third quarter, but lost money during a period when rivals including Ford Motor Co. (NYSE:F) turned a profit.
At the end of the day, the GM IPO, like most initial public offerings, is going to be a function of the company's strengths and the market's willingness to accept new issuers. If the stars are aligned, that could happen before the end of 2010.
"If you put numbers on the board, if things are going well and the capital markets are open, that in some point in the fourth quarter the markets will be open enough to do a successful IPO," Bloom said. That is a lot of "ifs."
- Lou Whiteman
Lou Whiteman is a senior writer covering the automotive, transportation and industrial sectors. Follow him on Twitter @louwhiteman
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Adele Gulfo
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Makes no sense. Akin to buying Time/AOL at 100 dollars a share, and subsequently selling it for 10 dollars. Under no circumstances should the govt. sell its stake until it has realized an inflation-adjusted profit on its investment.