GM expected to file for IPO

By Peter Whoriskey

General Motors is expected to file the paperwork as early as Tuesday for an initial public offering of stock, setting the stage for the U.S. government to begin selling off its majority stake in the automaker.

The United States has directly invested about $50 billion into the automaker, and in exchange it has a 61 percent ownership stake in the company, as well as some preferred shares. Some $6.7 billion in loans were repaid earlier this year.

How much of the U.S. investment will be returned depends largely on the price of the company stock, which is expected to go on sale later this year. For the government to recoup its investment, the market value of the company must rise to roughly $70 billion.

While analysts and some government officials were initially skeptical that GM could reach that level, the company's recent profits has led others to predict that the investment could be repaid in full.

The imminent stock sale follows months of relatively good news for the automaker. Last week, GM announced $1.3 billion profit for the second quarter, its biggest profit in six years.

The turnaround at GM reflects the reductions in debt that were achieved during the company's bankruptcy last year, as well as numerous plant closings and job reductions that enhanced its profitability.