General Motors executives have begun criss-crossing the US and the world on an investor roadshow ahead of the company's $40bn (£25bn) flotation, and they are being allowed to use private jets for the first time in two years
Their mode of travel was attracting almost as much attention as the financial details of the offering yesterday, which were published two years after car industry bosses caused a political furore by flying private aircraft to Washington to beg for bailout funds.
Since then, GM has received $49.5bn from the US taxpayer. The Government's 60 per cent stake will be cut to 43 per cent in the flotation, which will raise $9.5bn-$15.7bn. About a quarter of GM's shares will be freely traded on the New York Stock Exchange, putting the market capitalisation of the company at just over $40bn at the mid-point of the price range.
In that price range – from $26 to $29 per share – the US Treasury will be locking in a loss on GM, in contrast to its profits on bailout investments in Wall Street banks. GM shares would have to jump 60 per cent for taxpayers to break even as the remaining stake is sold. The final share price will be decided on 17 November, and GM will return to the stock market the next day.
Between now and then, GM executives will be meeting with potential investors. The company was ordered to sell its private jet fleet as a condition of the bailout, but will charter private jets so that executives can be sure of making meetings, with investors in North America, Europe and at sovereign wealth funds in Asia.
GM's old jet fleet came to symbolise its pre-bankruptcy management excess. At a 2008 Congressional hearing, the bosses of GM, Ford and Chrysler were asked to raise their hand if they travelled to the meeting on commercial flights. None did. The next time they travelled to Capitol Hill to ask for a bailout, they all drove.