1) GM: Still a long way to go to get our money back:
The federal and Ontario governments have decided to take the “prudent” approach to General Motors Co.’s initial public offering rather than follow the lead of the U.S. Treasury and the United Auto Workers health trust, both of which dramatically increased the number of shares they intended to sell Wednesday.
“We want to protect the investment by as much as we can,” Industry Minister Tony Clement told reporters in Ottawa.
He said the government has held “intensive” meetings with its advisors, Rothschild Inc., and determined its approach of offering 20 per cent of its shares in the IPO was the best way to maximize its investment.
GM has priced the offering at $33 U.S. a share after the close of the market on Wednesday, with its stock expected to begin trading on the Toronto Stock Exchange and the New York Stock Exchange today.
The total value of the deal has ballooned to $22.8 billion U.S., pushing it past the largest common-stock sale in history, Agriculture Bank of China’s $22.1-billion offering in July.
The Canadian governments, which collectively have a 11.7-per-cent ownership stake in GM after supplying the automaker with $9.5 billion U.S. in loans in July 2009, intend to raise more than $1 billion in the offering by selling 30.5 million shares and reducing their stake to 9.6 per cent at the most…
While the Canadians have taken the conservative approach, the Americans have been taking advantage of the hot IPO.
The U.S. Treasury increased its portion of the sale by 73 per cent to 358.5 million shares, raising up to $11.8 billion…
The U.S. Treasury needs to sell GM stock for an average of $43.67 a share to break even on its investment, and if the overallotment is exercised, then it would need to sell its remaining shares at $53.07 apiece to break even, according to data compiled by Bloomberg.
The Canadian governments need an average price across of about $54.25 to break even, and would have to sell its remaining stake at $60.08 a share to break even [emphasis added, good luck, see Update], if the overallotment is exercised, the same data shows…
2) Fiysler: Even further here, look what’s making big bucks for Ford and GM in the US and not for these guys:
The Big Three is [sic, and in the Gray Lady!] starting to look more like the Big Two, as Chrysler drifts further behind its larger hometown rivals Ford and General Motors, whose newly issued stock will be publicly traded for the first time on Thursday.
…Chrysler is increasingly being cast as the odd man out in Detroit’s automotive resurgence.
Chrysler’s sales in the United States are less than half what they were five years ago and its product lineup is still in the early stages of an overhaul.
On Wednesday, the company showed off its new Dodge Durango sport utility vehicle at the Los Angeles auto show, as well as the tiny Fiat 500 microcar that Chrysler dealers will begin soon begin selling in the United States [see here for Canada, and a post on the Cinquecento with photo here].
But industry analysts said that the company remained in low gear and was quite a way from its own public stock offering…
Chrysler cut its losses in the third quarter to $84 million, but still owes $7.4 billion to the United States and Canadian governments for loans it received. The interest payments on the loans — $899 million so far this year — has prevented it from posting any profits…
This year through October, Chrysler sales have risen 16 percent, to 910,000 vehicles. As recently as 2005, Chrysler sold 2.3 million vehicles in the United States. Over all, it currently ranks fifth among carmakers in the market, behind G.M., Ford, Toyota and Honda [Canadians for some reason like Chrysler a lot more--it's third here, selling almost twice as many vehicles per capita as in the States]. This year, G.M. has sold 1.8 million vehicles in the United States.
…the company continues to struggle to get traction in the revived market for pickup trucks. Sales of the Ram pickup have increased less than 2 percent this year, while pickup sales at Ford have risen 30 percent and at G.M. by 15 percent [emphasis added]…
Ford just keeps on truckin’
Meanwhile it’s hard to see GM, despite oodles of governmental cheerleading, making any money with this for quite some while:
Unplugging the Volt
Update: The stock closed in New York at $34.19, up 3.6%.