General Motors is freshly out of Chapter 11 bankruptcy but the Detroit automaker is already contemplating an initial public offering of stock in 2010. The proceeds of the IPO could be used to pay down debts owed to the United States and Canada.
The United States Treasury current owns more than 60 percent of General Motors, with Canadian governments holding an additional 11.7 percent stake in the Detroit automaker. In addition to the $50+ billion tab GM ran up with the governments in anticipation of its Chapter 11 filing, another $8 billion in government loans will mature in 2015.
In order to offset some of its debt, GM could issue an IPO as early as next year. “To the extent that we do an IPO, whereby, let’s say the government sells some of their shares but we also issue some new shares, those proceeds could be used to repay part of the U.S. Treasury and Canadian government loans,†GM CFO Ray Young told Automotive News.
In addition to the possible IPO, GM could repay some of its debts via a separate escrow account. The Treasury recently transferred $20 billion to an escrow account for GM, which the automaker could use to pay down its debts. However, Young said it was “premature†for GM to discuss using its escrow funds.
No timeframe has been given for a government exit from GM ownership.
