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GM readies IPO filing, in loan talks

General Motors Co is planning to file a statement in July outlining its plan for a public offering of its stock that could raise up to $20 billion, a person with knowledge of the preparations said.
Image: FILE PHOTO: GM Posts First Quarterly Profit Since 2007
The General Motors world headquarters.Bill Pugliano / Getty Images
/ Source: Reuters

General Motors Co is planning to file a statement in July outlining its plan for a public offering of its stock that could raise up to $20 billion, a person with knowledge of the preparations said Wednesday.

In addition, GM is in talks with JPMorgan Chase and Wells Fargo on deals aimed at providing improved access to consumers for auto loans at its U.S. dealerships, two people with knowledge of those talks said.

The sources were not authorized to discuss the still-confidential negotiations and asked not to be named.

GM now expects to raise $15 billion to $20 billion in its IPO, according to one of those with knowledge of the early-stage work ahead of a filing with U.S. securities regulators.

At that size, the deal would be the largest U.S. IPO since Visa Inc's offering of $19.7 billion in March 2008, according to Thomson Reuters data, and one of the biggest U.S. offerings of all time.

That projected range reflects stronger anticipated investor demand for the restructured automaker, the person said.

GM Chief Executive Ed Whitacre and other executives have said they favor an IPO as early as this year. Bankers had expected a stock listing to raise between $10 billion to $20 billion by selling part of the U.S. government's 60.8 percent stake in GM to investors.

The Treasury provided $50 billion of bankruptcy and bailout financing to GM last year. That rescue included $43 billion of cash and nearly $7 billion of direct loans.

GM repaid the $7 billion loan in April, and the rest of the U.S. investment is an equity stake the government can start selling after GM launches an IPO.

The automaker's connection with the United States government has earned it the nickname "Government Motors" and cost it market share domestically among consumers who view it as a failed company, analysts say.

Treasury spokesman Mark Paustenbach declined comment. A GM spokesman could not be immediately reached on the timing of an IPO filing.

Auto financing deal before IPO
Some GM dealers have complained of difficulty securing loans for subprime customers and in financing vehicle leases through Ally Financial Inc

GM sold control of Ally, formerly known as GMAC LLC, three years ago, making it the only major automaker in the U.S. market without a captive finance company.

Negotiations with JPMorgan and Wells Fargo are intended to broaden the availability of auto financing and remove a potential investor concern ahead of the IPO, according to the sources.

JPMorgan and Wells Fargo could not be immediately reached for comment.

GM said it was "developing relationships" with banks other than Ally "for specialized financing needs, such as leasing and sub-prime financing."

"Access to financing is an important part of the vehicle sales process," GM spokesman Tom Wilkinson said in a statement.

"We believe the auto financing business will continue to evolve and we'll continue to assess our overall needs," he said. He declined to elaborate.

JPMorgan Chase was the No. 1 U.S. auto lender in the first quarter while Wells Fargo was No. 2, followed by Toyota's captive financing arm and Ally Financial, according to data for the first quarter compiled by Experian Automotive. JPMorgan Chase accounted for 6.9 percent of loans while Wells Fargo had 5.4 percent, it said.

JPMorgan and Morgan Stanley have been named as lead underwriters for the GM IPO. The Treasury has also hired Lazard Ltd to advise it the deal.