GM Files 500 Page Paperweight-cum-Prospectus, Hopes To Sell $10 Billion In Stock To Hapless Lemmings

Tyler Durden's picture

GM has filed its IPO prospectus. At 276 pages, 240 F-pages, and 53-A pages, it is just slightly shorter than the entire text of healthcare reform. And since the fate of ponzi crony capitalism rest on the successful pricing of this dogshit, every single underwriter in the world (20 banks) is a participant, with Morgan Stanley lead left. In a nutshell, Government motors hopes to sell 365 million shares, with an expected price of $26-29/share. Now if only GM could focus on making good cars as much as they care about paying lawyers millions for writing the biggest paperweight in history, all would be well. And with no clear disclosed Uses of Funds, we are confident the government will take the proceeds to the Primary Dealers and compensate them for massive underwriter losses.

Summary terms:

THE OFFERING

 

Common stock offered by the selling stockholders

365,000,000 shares

 

Common stock to be outstanding immediately after this offering

1,500,000,000 shares

 

Voting rights

Holders of our common stock are entitled to one vote for each share of common stock held.

 

Common stock listing

Our common
stock has been approved for listing on the New York Stock Exchange under
the symbol “GM”. The Toronto Stock Exchange has conditionally approved
the listing of our common
stock under the symbol “GMM”, subject to our fulfilling all of the
requirements of the Toronto Stock Exchange.

 

Use of proceeds

We will not receive any proceeds from the sale of our common stock by the selling stockholders in this offering.

 

  We estimate
that the net proceeds to us from the concurrent offering of our Series B
preferred stock, after deducting underwriting discounts and commissions
and estimated offering expenses, will
be approximately $2.9 billion (or approximately $3.3 billion if the
underwriters in that offering exercise their over-allotment option in
full). We intend to use the net proceeds from the concurrent offering of
our Series B preferred stock, together
with cash on hand, to purchase shares of our Series A Preferred Stock in
accordance with our agreement with the UST and to make a voluntary
contribution to our U.S. hourly and salaried pension plans.

 

Underwriters’ option

The selling
stockholders have granted the underwriters a 30-day option to purchase
up to 54,750,000 additional shares of our common stock to cover
over-allotments at the public offering
price, less the underwriting discount.

 

Dividend policy

We have no
current plans to pay dividends on our common stock. Our payment of
dividends on our common stock in the future will be determined by our
Board of Directors in its sole discretion and
will depend on business conditions, our financial condition, earnings,
liquidity and capital requirements, the covenants in our new secured
revolving credit facility, and other factors. So long as any share of
our Series A Preferred Stock or
our Series B preferred stock remains outstanding, no dividend or
distribution may be declared or paid on our common stock unless all
accrued and unpaid dividends have been paid on our Series A Preferred
Stock and our Series B preferred
stock, subject to exceptions such as dividends on our common stock
payable solely in shares of our common stock.

 

Transfer Restrictions

Our
certificate of incorporation contains provisions restricting transfers
of various securities of the Company (including shares of our common

 


stock and warrants to purchase our common stock, and shares of our
Series B preferred stock issued in the Series B preferred stock
offering) if the effect would be to (1) generally increase
the direct or indirect stock ownership by any person or group from less
than 4.9% of the value of all such securities of the Company to 4.9% or
more or (2) generally increase the direct or indirect stock ownership of
a person or group having or
deemed to have a stock ownership of 4.9% or more of the value of all
such securities of the Company. These restrictions are intended to
protect against a limitation on our ability to use net operating loss
carryovers and other tax benefits. See the
section of this prospectus entitled “Description of Capital
Stock—Certain Provisions of Our Certificate of Incorporation and
Bylaws—Transfer Restrictions” for a more detailed description of these
restrictions.

 

Concurrent Series B preferred stock offering

Concurrently
with this offering of common stock, we are making a public offering
of 60,000,000 shares of our Series B preferred stock, and we have
granted the underwriters of that
offering a 30-day option to purchase up to 9,000,000 additional shares
of Series B preferred stock to cover over-allotments. Such shares of
Series B preferred stock will be convertible into an aggregate of up to
            shares of our common stock (up to             shares of our
common stock if the underwriters in that offering
exercise their over-allotment option in full), in each case subject to
anti-dilution, make-whole and other adjustments.

 

  We cannot
assure you that the offering of Series B preferred stock will be
completed or, if completed, on what terms it will be completed. The
closing of this offering is not conditioned
upon the closing of the Series B preferred stock offering, but the
closing of our offering of Series B preferred stock is conditioned upon
the closing of this offering. See the section of this prospectus
entitled “Concurrent Offering of
Series B Preferred Stock” for a summary of the terms of our Series B
preferred stock and a further description of the concurrent offering.

 

Conflicts of Interest

Because
Citigroup Global Markets, Inc. is an affiliate of the UST under Rule
2720 of the Conduct Rules of the Financial Industry Regulatory
Authority, Inc. (FINRA), a “conflict of
interest” is deemed to exist under Rule 2720. Accordingly, this offering
will be made in compliance with the applicable provisions of Rule 2720
of the FINRA Conduct Rules. For more information, see the section of
this prospectus entitled
“Underwriting—Conflicts of Interest.”

 

Risk factors

See “Risk
Factors” beginning on page 15 of this prospectus for a discussion of
risks you should carefully consider before deciding whether to invest in
our common stock.

The number of shares of common stock that will be outstanding after this offering is based on 1,500,000,000
shares of our common stock outstanding as of November 2, 2010 and excludes:

 

   

136,363,635
shares of our common stock issuable upon the exercise of warrants held
by MLC as of November 2, 2010 at an exercise price of $10.00 per
share;

   

136,363,635
shares of our common stock issuable upon the exercise of warrants held
by MLC as of November 2, 2010 at an exercise price of $18.33 per
share; and

 

   

45,454,545
shares of our common stock issuable upon the exercise of warrants held
by the New VEBA as of November 2, 2010 at an exercise price of $42.31
per share.

The
number of shares of common stock that will be outstanding after this
offering also excludes
up to approximately 17 million shares issuable upon settlement of
restricted stock units awarded pursuant to the General Motors Company
2009 Long-Term Incentive Plan and salary stock units awarded pursuant to
the General Motors Company Salary
Stock Plan as of June 30, 2010. Upon completion of this offering,
substantially all of these awards will be reclassified from cash-based
awards recorded as liabilities to equity-based awards and, consequently,
these awards will be considered in the
determination of basic and diluted earnings per share. Because the
salary stock unit awards vest immediately, upon completion of this
offering, our basic and diluted earnings per share calculation will
include approximately 2 million additional
shares underlying the salary stock unit awards. Similarly, we have
approximately 2 million restricted stock units outstanding to retirement
eligible participants which are fully vested and accordingly, upon
completion of this offering, will be
included in our basic and diluted earnings per share calculation. In
addition, we have approximately 13 million restricted stock units
outstanding which will not be included in basic earnings per share until
they are vested. The vesting period is
over a 3 year period that began on their initial grant date of March 15,
2010. Assuming a common stock price of $27.50 per share, the midpoint
of the range for the common stock offering set forth on the cover of
this prospectus, under the
application of the treasury stock method, these unvested restricted
stock units will result in the inclusion of approximately 2 million
additional shares in the denominator of our diluted earnings per share
computation immediately after this
offering.

The
number of outstanding shares also excludes any additional shares of our
common stock we are obligated to issue
to MLC (Adjustment Shares) in the event that allowed general unsecured
claims against MLC, as estimated by the Bankruptcy Court, exceed
$35.0 billion. The number of Adjustment Shares to be issued is
calculated based on the extent to which
estimated general unsecured claims exceed $35.0 billion with the maximum
number of Adjustment Shares (30,000,000 shares, subject to adjustment
for stock dividends, stock splits and other transactions) issued if
estimated general unsecured
claims total $42.0 billion or more. We currently believe that it is
probable that general unsecured claims allowed against MLC will
ultimately exceed $35.0 billion by at least $2.0 billion. In the
circumstance where estimated general
unsecured claims equal $37.0 billion, we would be required to issue
8.6 million Adjustment Shares to MLC.

The
number
of shares of common stock that will be outstanding after this offering
also excludes up to              shares of our common stock (up to
             shares if the underwriters in our offering of Series B
preferred stock exercise their over-allotment option in full), in each
case subject to anti-dilution, make-whole and
other adjustments, that would be issuable upon conversion of shares of
Series B preferred stock issued in our concurrent offering of Series B
preferred stock.

The
number of shares of common stock that will be outstanding after this
offering also excludes the $2.0 billion of common stock that we expect
to contribute to our U.S. hourly and salaried pension plans
after the completion of this offering and our concurrent offering of
Series B preferred stock. The common stock contribution is contingent on
Department of Labor approval, which we expect to receive in the
near-term. Based on the number of shares
determined using an assumed public offering price per share of our
common stock in the common stock offering of $27.50, the midpoint of the
range set forth on the cover of this prospectus, this anticipated
contribution would consist of 72.7 million
shares of our common stock. Although we reserve the right to modify the
amount or timing of the contribution, or to not make the contribution at
all, we currently expect to complete the contribution to the pension
plans in the near-term.

All
applicable share, per share and related information in this prospectus
for periods on or subsequent to July 10, 2009 has been
adjusted retroactively for the three-for-one stock split on shares of
our common stock effected on November 1, 2010.

Full Prospectus below (link):