The U.S. government is likely to take a loss on General Motors Co in the first offering of the automaker's stock, six people familiar with preparations for the landmark IPO said.
Subsequent offerings of the government's holdings may be profitable depending on how investors trade the newly listed stock, the sources said.
But the question of whether taxpayers are ultimately made whole on GM's $50 billion bailout could be left open for years, the people said.
It could take more than three years for the Treasury to sell down its remaining stake in GM after the IPO, one person said. That would push a final accounting into the next presidential term.
A decision to price the initial GM shares below the cost to taxpayers would follow the usual Wall Street practice of giving the first investors in a new stock a discount, but it could also help allay investor concern in the face of the slow recovery of the U.S. economy and flat auto sales.
Preparations for GM's IP0 remain confidential. Both GM and the U.S. Treasury have declined to comment, citing restrictions by U.S. securities regulators.
The Obama administration has pledged to exit its investment in GM as quickly as possible while holding out the prospect that taxpayers could ultimately be paid back in full.
Treasury spokesman Mark Paustenbach declined to comment. GM spokesman Tom Wilkinson also declined to comment.
GM plans to begin a roadshow for its IPO immediately after the November 2 U.S. midterm congressional elections, paving the way for a stock debut on November 18, sources have said.
GM in August filed paperwork for an IPO that could potentially be worth as much as $20 billion, making it one of the biggest IPOs of all time.
The U.S. Securities and Exchange Commission is now reviewing the automaker's S-1 filing.
Analysts and potential investors have projected a market value for GM of between $50 billion to around $90 billion, based on projections for the automaker's cash flow, comparisons with rival Ford Motor Co and trading in bonds in the old GM which are convertible into shares in the new company.
