GM preparing for offering to raise up to $20 billion

As early as next week, General Motors is expected to file a detailed proposal outlining its planned initial public stock offering to reduce the federal government's nearly 61 percent stake in the company, according to news reports Wednesday afternoon. 

The Initial Public Offering (IPO), which could happen before the November elections, could raise between $10 billion to $20 billion, allowing the automaker to become a publicly traded company again with the sale of about 20 percent of government-owned stock, possibly around 300 million shares. 

GM is likely to sell off all of the government's stake over a number of years, according to company officials. 

The filing with federal securities regulators could happen in July or August, setting up the IPO for about two months or so afterward. 

The Treasury Department used $43 billion of its $50 billion loan to buy a 60.8 percent stake in the company. GM repaid the other $7 billion in April. 

The registration statement is expected to announce that Morgan Stanley and JPMorgan Chase & Co. will be lead underwriters for the sale of part of the government's share of the company, according to reports. 

The Treasury also has hired New York investment bank Lazard Freres & Co. to advise it on GM's stock offering.

The two banks, and smaller underwriters, are expected to share a fee for handling the sale, which could range from $75 million to $150 million based on the stock sold — lower than most IPOs, a U.S. Treasury Department official told the Detroit News.

Since 1999, four U.S. IPOs have exceeded $5 billion — Visa Inc.’s $19.7 billion deal in 2008, AT&T Wireless Group’s $10.6 billion offering in 2000, Kraft Foods Inc.’s $8.68 billion deal in 2001 and United Parcel Service of America’s $5.47 billion sale in 1999, according to data compiled by Bloomberg. 

Earlier this week, Treasury Secretary Timothy Geithner said the improved performance of GM could narrow or possibly eliminate the government's losses in the deal.