The planned initial public offering of General Motors Co is likely to leave the U.S. government with a minority stake while also raising new funds for the automaker, people briefed on the still-developing plans said.
The U.S. Treasury, which owns 60.8 percent of GM stock as a result of its $50 billion bailout last year, aims to sell about 20 percent of its holdings as part of the stock sale, two sources with knowledge of the preparations said.
That would leave the U.S. government with a 49 percent stake before accounting for the further dilution from new GM share issuance.
GM is considering issuing new capital in the IPO, chipping away at the one liability on its balance sheet that the government-funded restructuring failed to address: a $27 billion shortfall in its pension funding, the sources said.
The retiree healthcare trust, affiliated with the United Auto Workers union but administered independently, also plans to sell part of its 17.5 percent stake in GM to raise cash and diversify its portfolio, the sources said. The healthcare trust is the No. 2 GM shareholder after the U.S. Treasury.
The sources asked not to be named because they were not authorized to discuss the confidential negotiations and no final decisions have been made.
The sources could not detail plans for the two smaller GM shareholders. The governments of Canada and Ontario own 11.7 percent of GM, while bondholders in the Old GM, now known as Motors Liquidation Company, have 10 percent.
The emerging terms of GM's planned IPO are expected to dominate interest among potential investors and analysts who will gather in Detroit on Tuesday to hear the first financial presentation by the automaker's new executive team headed by Chief Executive Ed Whitacre.
BEYOND THE BALANCE SHEET
GM is expected to talk about how a stronger balance sheet emerging from bankruptcy has made it possible to break even despite sharply lower U.S. sales, how it plans to expand further in fast-growing markets in China and how it plans to address remaining issues, like funding the restructuring of its money-losing European unit Opel.
Mirko Mikelic, a fixed income portfolio manager at Fifth Third Bank in Grand Rapids, Michigan, said he expected GM to face grilling about the risks of a return to recession in the United States.
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