General Motors is offering some 600,000 employees, retirees and dealers the chance to purchase stock in the resurgent company as the auto giant moves forward with its initial public offering, slated for next month.
Under GM's "directed share" program, workers and dealers have until Oct. 22 to register to buy an unspecified number of shares in the new company at the IPO price, according to a notice posted online. Typically during an IPO, small investors must purchase shares through a broker.
The deal gives those affiliated with GM a strong incentive to help the new company succeed, analyst Rebecca Lindland at IHS Automotive told The Detroit News. "It's good when employees have a certain stake in the company's performance," Lindland said. "It keeps you focused. Employees have a vested interest -- literally."
Rules of Registration
GM employees already have a vested interest in the form of a 17.5% holding by a retiree health care trust, managed by the United Auto Workers, established as part of the company's government-backed bankruptcy last year. Other stakeholders include the federal government, which has a 61% share, as well as the Canadian and Ontario governments and bondholders in the former GM.
To be eligible to buy shares, buyers must register via mail by Oct. 19 or online by Oct. 22. Those who fail to register won't be able to purchase stock at the IPO price. Though no minimum amount of stock has been specified, GM reportedly will require a minimum $1,000 investment.
GM shares are expected to begin trading on Wall Street next month, after the Nov. 2 midterm elections. Company officials will begin a "roadshow" soon after, with the goal of beginning a stock sale by Nov. 18.
Treasury Secretary Timothy Geithner and GM CEO Daniel Akerson met Tuesday for an hourlong meeting at the Federal Reserve Bank of New York ahead of the stock sale. Officials from both sides declined to discuss the meeting, but said that the IPO is on track for next month, barring unforeseen market changes, The DetroitNews reported. Treasury's top auto adviser, Ron Bloom, also attended.
Charging Up to Build Volts
The Detroit automaker hasn't decided whether it will offer an employee stock ownership plan after its IPO, according to the News, largely because, as an entity, GM doesn't own any stock.
About 79,000 U.S. employees, 9,000 in Canada, 517,000 retirees and surviving spouses and more than 3,000 dealers are eligible for the program, the Detroit Free Press reported. Morgan Stanley (MS), one of the lead underwriters of GM's IPO, is administering the purchase plan for employees.
Separately, GM said Tuesday it will start official production of the $41,000 Chevrolet Volt electric vehicle Nov. 10.
Models will begin showing up on dealer lots about a month later, Tom Stephens, the company's chief of global operations, told The Detroit News. Preproduction Volts have been built at the automaker's Detroit-Hamtramck plant since late March.