DETROIT -- General Motors Co. filed the paperwork last week to go public. Here are highlights:
-- The automaker will receive no proceeds from the sale of common shares. The U.S. Treasury Department and other existing shareholders will sell common shares.
-- GM will raise an unstated amount of money for operations from the sale of preferred shares. GM now has a healthy $31.5 billion in cash and securities.
-- Treasury, which now owns 61 percent of GM, probably will own less than 50 percent after the initial public offering. This should help GM start to shed its image as Government Motors.
THE CASE FOR GM
The filing lays out this case for the automaker in the coming years:
-- GM has a strong global footprint and scale, with particular strength in such high-growth markets as China and Brazil. "Approximately 43 percent of our vehicles are manufactured in regions we believe to be low-cost locations, such as China, Mexico, Eastern Europe, India and Russia, with all-in active labor costs of less than $15 per hour," the filing says.
-- GM cut operating costs in last year's bankruptcy and has plenty of cash to fund operations. On June 30, the company had cash and securities of $31.5 billion and debt of $8.2 billion. Interest expenses in the first half fell to $587 million from $4.6 billion in the year-earlier period.
-- The automaker promises a product onslaught in the next few years -- notably in small cars, which should cover a GM weakness. For example, sales start this fall in North America of the Chevrolet Cruze compact, which will replace the Chevrolet Cobalt.
-- With fuel economy standards rising worldwide, automakers need new technologies. GM has the money and expertise to develop alternative powertrains.
-- GM plans to put more vehicles on common platforms, which will cut costs by creating more scale and efficiencies. "We plan to increase the volume of vehicles produced from common global architectures to more than 50 percent of our total volumes in 2014 from less than 17 percent today," the filing says.
BUT MANY RISKS REMAIN
GM is working through various challenges, the filing says.
-- The company is profitable now, but the need for strong profits and cash going forward is legion. The company says it must fund a turnaround in Europe, pay for alternative powertrains and redesign and refresh dozens of products globally.
-- Lingering image problems dog GM's surviving brands in North America. "Changing this perception, including with respect to the fuel efficiency of our products, will be critical to our long-term profitability," the filing says.
-- GM's new CEO, Daniel Akerson, who is steeped in the telecommunications industry, starts Sept. 1. "The ability of our new executive management team to quickly learn the automotive industry and lead our company will be critical to our ability to succeed," the filing says.
Moreover, it says, Treasury's restraints on executive pay, along with other cuts in executive compensation, may harm GM's ability to hire and retain salaried employees.
-- GM's U.S. and non-U.S. pensions are underfunded by a combined $27.4 billion. But the company has some breathing room because its next mandatory pension contribution is not due until 2014.
-- The restructuring of GM's European operations is still a work in progress, requiring "significant additional funds" and management attention.