From riches to rags to riches again is the story that appears to be about General Motors. Two different governments had to loan GM billions, and now the business is posting profits again. GM did just a little retooling while in bankruptcy, divesting the brands that weren’t performing as well as expected. There is also a change being made in leadership. Despite the company having started a return to health, it still owes a hefty sum to the federal government. Time is going to tell if General Motors can pay off the loans following the Initial Public Offering, though General Motors leadership doesn’t think so.
GM will owe after IPO
General Motors has had a busy summer. The business got a new CEO, and announced it would file for an initial public offering. The company ended up filing for one, proving it was not just a boast. The taxpayers are nevertheless technically majority owners, as 61 percent of GM stock is held by the Treasury. In order to pay off the government, those shares have to be sold on the market to investors. However, according to the New York Times, GM is not all that sure it will completely repay the loans. There is a slight catch.
General Motors requires a track record first
GM has to prove that two quarters of optimistic numbers is not a fluke. The company needs more of a reputation. The new CEO of General Motors, Daniel Akerson, thinks it can be a couple of years before GM can repay the Treasury safely. He told a group of reporters at a recent press briefing that the auto conglomerate needs to build a history of solid performance again until the federal government shares can be fully divested.
A long road ahead
General Motors has pared itself down to four core brands, being Buick, Cadillac, Chevrolet and GMC. The change in leadership though, was precisely what Ed Whitacre had said all along.
NY Times
nytimes.com/2010/09/17/business/17auto.html?ref=automobiles
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