Car sales have been slumping for years, but Houston area General Motors dealerships (those that remain) have possible reason to rejoice: An IPO from the new and improved automaker is scheduled to take place on Thursday, November 18 and it will likely produce enough money to pay back a large portion of General Motor’s government bailout money.
The federal government has been the largest GM shareholder for some time, due to the large bailout package that cost taxpayers tens of billions of dollars. Since receiving the bailout funds, General Motors executives have promised the company would repay its government debt and resume operations as an independent company. This promise is moving closer to reality as the IPO nears.
Originally, GM had set the opening share price for its IPO at approximately twenty- six to twenty- nine dollars. However, interest in the General Motors IPO has escalated and now, GM expects to receive a slightly higher price per share, somewhere in the thirty- two to thirty- five dollar price range.
GM expects to sell 1.5 billion common shares through this IPO. If the company can get the thirty- three dollar price (the high end of the estimate), it would raise almost fifty billion dollars. This wouldn’t be enough to pay back all of the debt, but it would reduce the government obligation (the U.S. government owns about forty percent of the shares) significantly and return a large percentage of taxpayer funds.
American taxpayers should hope for the best and cheer General Motors stock to higher than expected levels. The greater the share price, the more quickly GM can satisfy its government debt and the sooner the taxpayers can get back the money loaned to the automotive giant. And with a prosperous General Motors, Houston and other American cities, both large and small, can expect to see expanded franchises and the reopening of dormant dealerships as early as next year.
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