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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):

 

 


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Wed, 11/03/2010 - 15:59 | Link to Comment Ragnarok
Ragnarok's picture

Mandatory participation makes for successful IPO.

Thu, 11/04/2010 - 03:34 | Link to Comment ZeroPower
ZeroPower's picture

I wonder why theyre asking to be cross-listed with the TSX - i dont believe this was the case 'last time'

Wed, 11/03/2010 - 15:59 | Link to Comment RobotTrader
RobotTrader's picture

They are geniuses.

They picked the EXACT TOP in the auto sector to offload this garbage.

Check out TRW today....

Wed, 11/03/2010 - 16:29 | Link to Comment HarryWanger
HarryWanger's picture

As I said, I'm in Detroit for meetings and the auto execs are giddy and downright arrogant right now on this comeback. Having dinner with some execs in the suppliers tonight. These are the guys that said once we hit 12 million units, they'll be printing money in Detroit. Well, we hit over 12 million today - drinks are on them. BTW: One is an exec at TRW. Good times tonight!

Wed, 11/03/2010 - 16:36 | Link to Comment TheSettler
TheSettler's picture

Poser Bitch!!!

Wed, 11/03/2010 - 23:06 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

I don't give a shit how much they raise in this public offering;

I WILL NEVER BUT A GM PRODUCT. 

GM can go for eternity without paying any taxes;

I WILL NEVER BUY A GM PRODUCT.

The Chevy Volt can be the greatest invention since the Wonder Bra;

I WILL NEVER BUY A GM PRODUCT.

Fuck you, UAW, Obama, and General Motors;

I WILL NEVER BUY A GM PRODUCT.

Thu, 11/04/2010 - 02:12 | Link to Comment sethstorm
sethstorm's picture

When other manufacturers can come up with that is underpowered, dollar-for-dollar versus GM's entire lineup, then I'll reconsider my decision to keep on buying General Motors's products.  If you want to drive something as bland as a saltine cracker, and as large as a golfcart, go ahead. 

As long as there is a Detroit company that brings US-built power to the masses, and not austerity in car design, I'll have mine General Motors.  Just not from their dead duck Buick division.  Nor will I buy anything marked eco-*, earth-friendly, hybrid, compact, sub-compact, "global", or anything that detracts from Detroit's way of more power for the dollar.

 

Wed, 11/03/2010 - 16:38 | Link to Comment NoBull1994
NoBull1994's picture

Trying to figure out what has more value, my Federal Reserve Notes or shares of GM.....

Wed, 11/03/2010 - 17:13 | Link to Comment NotApplicable
NotApplicable's picture

I wonder if they're giddy for the same reasons the homebuilders were after they collapsed, mega tax breaks. In GM's case, $45B in Benny Bucks!

http://online.wsj.com/article/SB1000142405274870446270457559064214910320...

Wed, 11/03/2010 - 21:26 | Link to Comment Eally Ucked
Eally Ucked's picture

Now you'll be able to replace roof over your garage and pay for I-pad at one swing, what is the price we should pay for that shit?

Wed, 11/03/2010 - 16:00 | Link to Comment SheepDog-One
SheepDog-One's picture

Sell it to Bernanke, he'll buy any garbage! I hope this travesty of GM does a full faceplant.

Wed, 11/03/2010 - 16:00 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

I wonder if somewhere in those 500+ pages is a line that says in effect, "the Govt and John Paulson may be shorting this issue"

Wed, 11/03/2010 - 16:00 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

You have got to love their attempts to convince us that the bailouts were not only a good idea, but a good investment for the sake of the nation!

AIG, TARP, ZIRP, don't worry, they all worked out amazingly well, never mind those people telling you they were handouts to the wealthy elite, trust us!  Right....

http://psychonews.site90.net

Wed, 11/03/2010 - 16:10 | Link to Comment lizzy36
lizzy36's picture

Moral hazard a quaint notion, like the debt ceiling, and transparency.

Wed, 11/03/2010 - 16:03 | Link to Comment John McCloy
John McCloy's picture

oo oooo and breaking news. CNBC will have Prince Alaweed on at 4:15 (Dressed in full James Bond Villian Regalia) to ask him "If he is interested in purchasing GM's offering.

http://www.youtube.com/watch?v=JX9k6gFX_TQ

Wed, 11/03/2010 - 16:00 | Link to Comment SMG
SMG's picture

November 18th is IPO the day.  I guess no market crash till then.

Wed, 11/03/2010 - 16:05 | Link to Comment mbasham
mbasham's picture

Meanwhile small investors pulled another $2.9 billion from domestic equity mutual funds last week. What if GM holds a (stock) sale and nobody comes?

Wed, 11/03/2010 - 16:30 | Link to Comment NotApplicable
NotApplicable's picture

There is no way the would IPO this crap if they didn't already have buyers setup with Benny Bucks to buy it.

After all, this is a circus, not a market. The show must go on, and the show will go on.

Wed, 11/03/2010 - 16:06 | Link to Comment OldTrooper
OldTrooper's picture

"Hapless Lemmings"

Best laugh I've had all day!  So apt.

Thu, 11/04/2010 - 08:10 | Link to Comment MarketTruth
MarketTruth's picture

+1   Funny how few seem to remember the previous debt holders of GM were literally SLANDERED ON NATIONAL TV BY OBAMA and forced to take far, far less than what was legally and rightfully theirs due to GM bankruptcy. Only a total idiot would buy GM knowing the aforementioned information.

Wed, 11/03/2010 - 16:08 | Link to Comment chunkylover42
chunkylover42's picture

The conspiracy theorist in me thinks that the administration will "arm-twist" the folks over at Russell and S&P to have GM added to various indices, thus creating faux demand. 

My gut tells me that no matter how crappy this thing looks (hey, TWO STRAIGHT profitable quarters!), the gov't desperately needs something positive to cling to, so the stock will do well.

Wed, 11/03/2010 - 16:09 | Link to Comment plocequ1
plocequ1's picture

500 pages? What a waste of fucking trees. All GM had to do is go to the FED and saved all that time and work.

Wed, 11/03/2010 - 16:09 | Link to Comment SDRII
SDRII's picture

Good thing that SAAR is back above 12. Walked that up just like consumer confidence off the March low

Wed, 11/03/2010 - 16:11 | Link to Comment Turd Ferguson
Turd Ferguson's picture

This is equivalent to Pets.com and all the other BS IPOs that were sold/pitched in Q1 2000. Everybody tried to steal as much $ as possible before the collapse.

Wed, 11/03/2010 - 16:11 | Link to Comment Iceobar
Iceobar's picture

Where was Elizabeth Warren when they wrote this fireplace fodder? Something about "one page"???.....lol

Wed, 11/03/2010 - 16:16 | Link to Comment Tinsu
Tinsu's picture

When do they start selling these shares?

Wed, 11/03/2010 - 16:31 | Link to Comment Printfaster
Printfaster's picture

The shares will have already been sold by the PDs.  All you will see on IPO is short covering by the PDs.

 

In the mean time watch GM stock price action and distribution as the shorts are written.

 

Wed, 11/03/2010 - 16:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

GM Files 500 Page Paperweight-cum-Prospectus.............

A ream of paper for those who will soon be reamed.

Wed, 11/03/2010 - 16:28 | Link to Comment Iceobar
Iceobar's picture

GM = Government Manual

Wed, 11/03/2010 - 16:32 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Meanwhile Chrysler waits for it's "C" symbol to be returned or it's third bailout

 

Wed, 11/03/2010 - 16:36 | Link to Comment Justaman
Justaman's picture

Can the gubmint buy crap, sell crap, and buy the same crap again...then report to us that we made a profit on the resurgence of American manufacturing? 

I just threw up...

 

 

Wed, 11/03/2010 - 16:45 | Link to Comment NotApplicable
NotApplicable's picture

Isn't a paperweight made of paper kind of like dividing by zero? Or does the binding save the day?

Wed, 11/03/2010 - 17:09 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Since Government Motors is owned by Uncle Sam, it seems almost as if they were holding the markets up just long enough to unload this turd.

At one point, I thought GM had a glimmer of hope. Now, it's doomed to fail. The same old, "save a penny" cost cutting back in the day is going on now. "Hey I've got a great idea! Let's build a Cadillac in Mexico, where the labor is real cheap, so we can save a buck. But instead of passing on the savings to the customers, we'll pocket the savings and issue big fat bonuses!"

Wed, 11/03/2010 - 17:23 | Link to Comment optimator
optimator's picture

This must mean the Government has finished its purchase of GM vehicles.  Sure made the books look good and I wonder if anyone has the numbers of vehicles purchased?

Wed, 11/03/2010 - 17:32 | Link to Comment ejmoosa
ejmoosa's picture

I suggest everyone request of copy of the paperweight prospectus, and have it mailed to them.

It's the most you as a taxpayer may ever get out of this deal.

 

Wed, 11/03/2010 - 23:05 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Free TP!

Wed, 11/03/2010 - 17:33 | Link to Comment Segestan
Segestan's picture

Over priced .. but GM is a great company.

Wed, 11/03/2010 - 17:39 | Link to Comment Ricky Bobby
Ricky Bobby's picture

Bravo Tyler your opening paragraph is so wickedly righteous . I think if we look closer at the healthcare bill we will find all amerikans are required to buy GM stock.

Wed, 11/03/2010 - 17:39 | Link to Comment wawawiwaa
wawawiwaa's picture

This stock is going to fly and everyone is going to be scratching their heads. Rather than complain partake in the free money and buy this sucker.

You would have made a killing in all the TARP paper particularly the preferreds etc after TARP was announced so close your eyes and BUY..

Wed, 11/03/2010 - 18:25 | Link to Comment Downtoolong
Downtoolong's picture

Dealers, professional traders, and underwriters are going to have a hay day with this issue, all in the name of glory for the common good. I expect for a couple of months it will be the new hot stock, like Apple or Google that everyone thinks they know something about and need to have a position in. The vol will be huge as a new story about GM’s latest R&D efforts, sales forecasts, and great expectations hits the CNBC headlines every day. Looks like the HFT gang still has at least 8 months to play this one out too.

 

The ones I feel sorry for are the die hard, buy American bunch who might still rationalize that they are somehow being patriotic by sinking their hard earned savings into this dog, buying shares up to $50. Then one morning they will wake up to find that all the Wall Street professionals who originally sold them on the stock were aggressively shorting it overnight, and their entire life savings will be worth less than the 1983 Buick parked in their driveway. But, don’t worry, that’s probably way off in the future, which in Wall Street time means sometime around April 1, 2011.

Wed, 11/03/2010 - 18:37 | Link to Comment No More Bubbles
No More Bubbles's picture

How many millions did they spend on the fucking prospectus?  What a waste of money.  How long before the new equity is worthless again?  2 years maybe?

Wed, 11/03/2010 - 19:54 | Link to Comment Bagbalm
Bagbalm's picture

500 pages? Put a hot babe on the cover and sell it as a a bodice ripper. $24.98 and it will have better margins than the cars.

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Eally Ucked's picture

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Wed, 11/03/2010 - 22:13 | Link to Comment Buck Johnson
Buck Johnson's picture

They don't know that GM is a dead company unless it can shed it's liabilities (the union pensions and healthcare for retires, including the pay scale).  GM will eventually have to file for bankruptcy again, because all the "good news" coming out is good until the IPO is put out and the stock is purchased.  Then you will see the real numbers and see that most of GM money was being subsidized by the Fed.

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