General Motors' Initial Public Offering: Review of Issues and Implications for TARP

General Motors' Initial Public Offering: Review of Issues and Implications for TARP

General Motors’ Initial Public Offering:
Review of Issues and Implications for TARP
Bill Canis
Specialist in Industrial Organization and Business
Baird Webel
Specialist in Financial Economics
Gary Shorter
Specialist in Financial Economics
November 10, 2010
Congressional Research Service
7-5700
www.crs.gov
R41401
CRS Report for Congress
P
repared for Members and Committees of Congress

General Motors’ Initial Public Offering: Review of Issues and Implications for TARP

Summary
In the fourth quarter of 2010, General Motors Company (GM) is planning to issue an initial
public offering (IPO) of stock to investors, seeking to become a publicly traded company and
shed its image as “Government Motors.”
General Motors Corporation (Old GM) was a publicly traded company from 1916 until its
bankruptcy in 2009. As part of restructuring, GM and Old GM combined received over $50
billion in federal assistance through the federal Troubled Asset Relief Program (TARP). In
exchange for this financial support, most of Old GM’s assets were sold to General Motors
Company, a new corporation owned by the U.S. Treasury (60.8%), the United Autoworkers
(UAW) retiree health care trust fund (17.5%), the governments of Canada and Ontario (11.7%),
and a group of bondholders (10%).
GM is not the only company that received TARP funds as a result of the severe September 2008
financial panic. More than 700 institutions received support, with the federal government taking
ownership stakes in five large companies: GM, Chrysler, GMAC (now called Ally Financial),
AIG, and Citigroup. The federal government stake in GM is unusual, however, in that GM is both
not publicly traded and is majority-owned by the federal government. The Obama Administration
and GM have both indicated interest in reducing or eliminating the federal stake in GM. In
October 2009, GM and its owners agreed that the federal government would launch an IPO in
July 2010, unless GM had already begun such a process.
The success of the GM IPO largely hinges on two major factors: GM’s internal restructuring
changes and the performance and outlook of the U.S. economy, including U.S. retail auto sales.
Since General Motors Company was created in 2009 with many of the assets of its predecessor
company (General Motors Corporation), it has closed plants, cut its hourly and salaried
workforce, shed three brands, reduced debt, introduced popular new vehicles, and implemented
changes in retiree legacy costs that had been a major financial drain. In addition, the U.S.
Treasury appointed new management at the company and new members to its board of directors.
These management changes have arguably worked to reorient the GM corporate culture to be
more responsive to the auto markets. Although GM acknowledged in a recent filing with the
Securities and Exchange Commission (SEC) that more needs to be done, these benchmarks
suggest to some that there will be a favorable response from potential shareholders.
For the first half of 2010, U.S. gross domestic product (GDP) was expanding, unemployment was
very slowly dropping, and auto sales were rising from their 30-year low in 2009. In August 2010,
however, the macroeconomic outlook became more uncertain. A number of economic indicators
deteriorated: unemployment claims unexpectedly rose in mid-August, GDP growth estimates
were revised down, and U.S. auto sales forecasts have been pared down. One relevant indicator of
the overall health of the U.S. economy—sales of existing homes—hit a 15-year low in July 2010.
GM has filed the necessary registration paperwork with the SEC to issue an IPO, which is
tentatively scheduled for November 18, 2010. This report discusses the IPO process, the factors
that will affect its success, the size of the initial IPO, the IPO’s possible stock price, and the IPO’s
impact on TARP. The report will be updated when these key elements are determined or upon
other major developments.
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General Motors’ Initial Public Offering: Review of Issues and Implications for TARP

Contents
Introduction ................................................................................................................................ 1
General Motors’ Search for Capital ............................................................................................. 2
Old GM Faced a Capital Crisis in 2008-2009 ........................................................................ 2
Federal Loans and Bankruptcy .............................................................................................. 5
Post-Bankruptcy General Motors ................................................................................................ 7
Elements of Federal Ownership................................................................................................... 8
Issues Arising in the GM IPO...................................................................................................... 9
IPOs in the U.S. Auto Industry ............................................................................................ 10
What Is an IPO?.................................................................................................................. 12
The Basics of an Initial Public Offering......................................................................... 12
The IPO Registration Process........................................................................................ 13
The Contours of GM’s Emerging IPO ................................................................................. 15
Reasons for Issuing the IPO in Fall 2010 ............................................................................. 17
Risks in the Issuance of the IPO .......................................................................................... 20
Internal Risks................................................................................................................ 21
External Risks............................................................................................................... 22
Recouping Federal Funds Invested in GM ........................................................................... 24

Tables
Table 1. Top Five U.S. Automakers ............................................................................................. 4
Table 2. Companies with Large Government Ownership Stakes................................................... 8
Table 3. Signs of U.S. Economic Recovery in the First Half of 2010.......................................... 20
Table 4. Market Value of General Motors Corporation (Old GM), 2000-2009............................ 25
Table A-1. Chronology of Federal Aid Through August 10, 2010............................................... 26

Appendixes
Appendix. Federal Financial Support for General Motors Through the Troubled Asset
Relief Program....................................................................................................................... 26

Contacts
Author Contact Information ...................................................................................................... 27

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General Motors’ Initial Public Offering: Review of Issues and Implications for TARP

Introduction
In the fall of 2008 and well into 2009, collapsing world credit markets and a slowing global
economy combined to create the worst market in decades for production and sale of motor
vehicles in the United States and other industrial countries. U.S. auto production fell by more than
34% in 2009 over 2008 levels, but the year-over-year fall-off was more acute for General Motors
(Old GM)—production dropped by 48%—and for Old Chrysler, whose production fell by 57%.1
A similar pattern was reflected in U.S. motor vehicle sales, as the seasonally adjusted annual rate
(SAAR) fell from just over 16.5 million units in 2007 to only 10.4 million units in 2009.2
The production and sales slides were serious
Terminology:
business challenges for all automakers, and
General Motors Corporation and
rippled through the large and interconnected
General Motors Company
motor vehicle industry supply chain, touching
As a result of bankruptcy proceedings, there are two
suppliers, auto dealers, and the communities
companies commonly referred to as “GM.” Both are
where auto-making is a major industry. Old
discussed in this report. General Motors Corporation
filed for bankruptcy in June 2009, and many of its assets
GM and Old Chrysler were in especially
and liabilities remain under the jurisdiction of the U.S.
precarious positions.3 The immediate crisis
Bankruptcy Court for the Southern District of New
that brought these two companies to
York as part of the bankruptcy estate. In this report, that
bankruptcy was a loss of financial liquidity as
company is referred to as “Old GM.” In July 2009, the
the banking system’s credit sources froze and
majority of Old GM’s assets and some of its liabilities
were purchased by a new entity that was subsequently
neither company had enough internal reserves
renamed “General Motors Company.” The U.S.
to weather the economic storm. Their
Treasury Department is its majority shareholder, and it
liabilities exceeded their assets, and they
is an entirely new legal entity. In this report, it is
turned to the federal government for assistance
referred to as “GM.”
in November 2008.
While not the focus of this report, Chrysler also went
through bankruptcy in 2009, and the pre-bankruptcy
In December 2008 and the early months of
entity is referred to as “Old Chrysler.” The company
2009, both automakers received federal
created in June 2009 is referred to in this report as
“Chrysler.”
financial assistance from the Bush and Obama
Administrations. As discussed later in this
report, that funding was a lifeline that enabled them to begin restructuring their operations, a
process that was ultimately completed in bankruptcy court.
Alone among the world’s major automakers, Old GM and Old Chrysler filed for bankruptcy in
the summer of 2009 and, with oversight from the Obama Administration as well as the
bankruptcy court, restructured their operations in an attempt to become more competitive

1 Other automakers’ U.S. production fell as well: Toyota’s by 28%, Honda’s by 27%, and Ford’s by 13%. Source:
“North American Car and Truck Production,” Automotive News, January 11, 2010. GM and Chrysler sales in 2008
were made by Old GM and Old Chrysler; 2009 sales include sales made by both entities before they filed for
bankruptcy as well as sales made by new GM and new Chrysler after bankruptcy.
2 U.S auto sales for most of the decade 2000-2009 were above 16 million SAAR. Ward’s, Ward’s Motor Vehicle Facts
& Figures 2009, “U.S. Retail Sales of Cars and Trucks.” SAAR is a rate adjustment used for business data that
attempts to remove the seasonal variations in the data. Most data will be affected by the time of the year. Adjusting for
the seasonality in data means more accurate relative comparisons can be drawn from month to month all year. Sourced
from “Investment Dictionary,” http://www.answers.com/topic/seasonally-adjusted-annual-rate-saar.
3 For a full analysis of the decline in U.S. and other industrial country auto manufacturing during the recent recession,
see CRS Report R41154, The U.S. Motor Vehicle Industry: A Review of Recent Domestic and International
Developments, by Bill Canis and Brent D. Yacobucci.
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General Motors’ Initial Public Offering: Review of Issues and Implications for TARP

companies. Both companies are now governed by newly constituted boards of directors. GM’s
new board members and chairman were chosen by the U.S. Treasury Department. Both
companies have sizable ownership stakes by the federal government and the United Auto Workers
(UAW).4
As the economy and auto markets improved in 2010, so too did GM’s balance sheet and its
outlook. GM paid off a $6.7 billion federal loan ahead of time, and the new management team
indicated that it would like to float stock so GM would be a publicly traded company.
This report analyzes the progress General Motors Company has made since it was created from
the sale of the bankrupt Old GM in July 2009 and the major issues related to its anticipated 2010
initial public offering (IPO).5
General Motors’ Search for Capital
General Motors Corporation was a publicly traded company from 1916 until it filed for
bankruptcy in June 2009.6 The immediate crisis that led it to seek federal assistance was a
shortage of capital. Returning to the capital markets to issue an initial public offering is the path
GM intends to take to reduce dependence on the federal government. The IPO may allow the
federal government to divest its assets in the company, although the Treasury Department
estimates an overall loss of $17 billion to the government from federal support of GM, Chrysler,
and GMAC/Ally Financial, so there may be an overall loss on the government’s GM investment.7
Old GM Faced a Capital Crisis in 2008-2009
Old GM faced a capital crisis in 2008 and 2009 because the normal avenues for raising capital
were unavailable: auto sales were plummeting; the company had limited success in selling off
assets; its efforts to cut costs were affected by the long timeline required to determine the efficacy
of such steps; and sources of capital in the open market were frozen by the financial meltdown.
As a consequence, the company’s executives tried to arrange federal bridge loans beginning in the
fall of 2008.8 As Old GM’s then-Chief Executive Officer (CEO) Fritz Henderson stated in the
company’s bankruptcy court filing:
By the fall of 2008, [Old GM] was in the midst of a severe liquidity crisis, and its ability to
continue operations grew more and more uncertain with each passing day. The Company
previously has recognized the need for bold action to modify and transform its operations
and balance sheet to create a leaner, more efficient, productive and profitable business; and

4 The federal government owns 60.8% of GM and 9.85% of Chrysler. The Voluntary Employee Beneficiary
Association (the UAW’s retiree health care plan) owns 17.5% of GM and 67.7% of Chrysler.
5 Chrysler is not expected to seek an IPO until 2011 or later; this report does not discuss Chrysler’s turnaround.
6 William J. Holstein, Why GM Matters: Inside the Race to Transform an American Icon (Walker & Company, 2009),
p. 4.
7 U.S. Treasury, Troubled Asset Relief Program: Two Year Retrospective, October 2010, available at
http://www.financialstability.gov/docs/
TARP%20Two%20Year%20Retrospective_10%2005%2010_transmittal%20letter.pdf.
8 A bridge loan is a temporary, short-term loan made to a borrower, with the expectation that it will be repaid quickly.
At Investorwords.com, http://www.investorwords.com/581/bridge_loan.html.
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it had expended a tremendous amount of resources and effort, on operational, strategic
partnering, and financial fronts, to accomplish this task. Unfortunately, because of the
continuing and deepening recession, aggravated by the collapse of Lehman Brothers
Holdings on September 15, 2008, GM was not able to achieve its objective. As a result of
the economic crisis, the Company was compelled to seek financial assistance from the
federal government.9
When capital markets are functioning normally, companies might arrange for debt financing
through a major investment bank such as Goldman Sachs or J.P. Morgan Chase. In 2007, Ford
Motor Company’s then-new president and CEO, Alan Mulally, prompted Ford to borrow $23.5
billion to finance a restructuring of the company, which was then seen to be in financial peril.
Capital was still available at that time, allowing Ford to mortgage all of its assets to obtain a large
loan. An article in Fortune described the precarious position that led Ford to refinance its
operations:
When Mulally arrived in September 2006, he took over a company on the verge of collapse.
Ford lost $12.6 billion that year and another $2.7 billion in 2007. Mulally put up every asset,
including the blue-oval trademark, as collateral to borrow $23.5 billion to keep the company
afloat. Then he set about his mission of creating a global Ford, both in terms of the vehicles
it produces and how it produces them.
Mulally is gambling that by globalizing the Ford brand, which covers everything from
$15,000 subcompacts like the Fiesta to $60,000 diesel-powered pickup trucks, he can raise
margins, which are now less than zero: The company is losing money on every car and truck
it sells in North America. “We know [this strategy] works,” he says, “because this is the way
Toyota grew up.”10
As Old GM’s bankruptcy filing indicated, these avenues for raising capital were not available in
the late fall of 2008. There were a number of long-simmering issues, both internal and external to
GM, however, that lay behind its financial difficulties.
• Steady loss of U.S. market share. Old GM, once the largest automaker in the
world, lost that 77-year-old title in 2009 as Toyota’s sales eclipsed it. As shown in
Table 1, Old GM—which at its peak sold 51% of all autos in the United States—
has seen its market share slide for many years, dropping from over 28% in 2000
to under 20% in 2009.

9 Affidavit of Frederick A. Henderson Pursuant to Local Bankruptcy Rule 1007-2, U.S. Bankruptcy Court, Southern
District of New York, filed June 1, 2009.
10 Alex Taylor III, “Can This Car Save Ford?,” Fortune, April 22, 2008.
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Table 1. Top Five U.S. Automakers
Sales of cars and light trucks, U.S. market share
Company
2000
2009
General
Motors
28.1%
19.8%
Toyota
9.3%
17.0%
Ford
23.1%
16.1%
Honda
6.6%
11.0%
Chrysler 11.7%

8.9%

Source: “U.S. Light Vehicle Sales,” Market Data Book, Automotive News, 2002, and “U.S. Car and Light Truck
Sales by Make, 12 Months, 2009,” Automotive News, January 5, 2010.
Notes: Ford data do not include Volvo, Land Rover, and Jaguar; GM data do not include Saab. Sales in 2000
are for Old GM and Old Chrysler. Sales in 2009 are the combined sales of Old GM/GM and Old
Chrysler/Chrysler.
• Break-even point for car making was too high. The break-even point is the
volume of sales at which net sales (i.e., gross sales after discounts, returns, and
freight are deducted) equal its costs.11 For Old GM, that point required a higher
level of U.S. motor vehicle sales that is not likely to be seen for many years. In
2009, Old GM said that the U.S. market would need to hit a seasonally adjusted
annual rate of 11.5 million to 12 million vehicle sales a year for it to break
even.12 Yet U.S. sales in 2009 were only 10.4 million units, and are forecast by
IHS Global Insight and others to be about 11.5 million units in 2010.13
• Exceptional labor and retiree health care costs. The Detroit 3 automakers (Old
GM, Ford, and Old Chrysler) negotiated contracts with the UAW over the years
that expanded health care to unionized workers at a level the companies could
not sustain when imported vehicles began to take large shares of the U.S. market.
Old GM estimated that its retiree health care and pension costs added $1,500 to
the cost of every U.S.-made vehicle, and exceeded the cost of the steel used in
the vehicles.14 Old GM had obligations of nearly $30 billion to fund the retiree
health care and pension funds.15

11 InvestorWords.com, http://www.investorwords.com/575/break_even_point.html.
12 Jeff Green and Caroline Salas, “GM Said to Speed Cutbacks to Lower Break-Even Point,” Bloomberg, April 22,
2009, at http://www.bloomberg.com/apps/news?sid=aOloQhPHrqX0&pid=newsarchive.
13 U.S. auto sales forecast, “Forecast and Analysis: Latest Developments,” IHS Global Insight, July 28, 2010.
14 Julie Appleby and Sharon Silke Carty, “Ailing GM Looks to Scale Back Generous Health Benefits,” USA Today,
June 23, 2005.
15 Bill Visnic, “UAW Cornered on VEBA?,” Edmunds, February 27, 2009, at http://www.autoobserver.com/2009/02/
uaw-cornered-on-veba.html.
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• Corporate culture. It has been alleged that Old GM’s corporate executives were
too insulated from the above factors and not in tune with U.S. customers’
changing auto needs. The Obama Administration’s Auto Task Force at the
Treasury Department, which oversaw restructuring of Old GM (and Old
Chrysler), repeatedly said that changing its senior executive corps and the
internal corporate culture would be one of the most important steps in Old GM’s
transformation to a more competitive company. It was a factor in the Obama
Administration firing of Old GM’s then-chairman and CEO, Rick Wagoner, in
2009.
In addition, one auto industry observer said that Old GM’s top executives were
insulated from the auto-buying customers, and that they “have traditionally been
finance men who look at vehicles themselves as the end result of a great
enterprise, rather than critical products to which the utmost attention should be
paid. There has long been a saying in Detroit that General Motors, with its huge
credit, financing and mortgage operations, is less of a car company than a bank
that builds cars.”16
• Decline in the U.S. auto market. In 2008 and the first half of 2009, U.S. auto
sales were in a freefall, ultimately dropping further than at any time in three
decades. The 2009 combined sales of Old GM and GM fell by 30% (compared
with 2008 sales), a much steeper decline than any other automaker, except the
combined sales of Old Chrysler and Chrysler.17 The decline in sales further dried
up financial resources that Old GM could have utilized.
• Erratic gasoline prices. In 2008, gasoline prices rose to over $4 a gallon in
many parts of the United States, raising questions in many consumers’ minds
about vehicles with lower mileage capabilities, such as the pickup trucks and
SUVs produced by the Detroit 3. As Old GM’s then-CEO Fritz Henderson said in
a filing before the U.S. bankruptcy court, there were “substantial increases in the
price of crude oil to nearly $150 per barrel in 2008, which precipitated a sharp
downturn in driving and sales in the large vehicle segments in which GM was
dominant and most profitable.”18
Federal Loans and Bankruptcy
The first federal loans to Old GM were made by the Bush Administration in December 2008,
after efforts to pass special legislation for Old GM and Old Chrysler failed to clear Congress.19 At
that time, Old GM received $13.4 billion from the U.S. Treasury, the first of several loans made
through the Troubled Asset Relief Program (TARP), which was authorized by the Emergency

16 Micheline Maynard, The End of Detroit (New York: Doubleday, 2003), pp. 11-12.
17 Automotive News, “US Car and Light Truck Sales by Make—12 Months 2009,” January 5, 2010, and “US Car and
Light Truck Sales by Make—12 Months 2008,” January 12, 2009.
18 Affidavit of Frederick A. Henderson, part of General Motors filing in the U.S. Bankruptcy Court, Southern District
of New York, June 1, 2009, pp. 18-19.
19 In December 2008, the House of Representatives passed H.R. 7321, authorizing the use of certain Department of
Energy funds as bridge loans to GM and Chrysler. Passed 237-170, the bill was not acted upon in the Senate. For a
complete description of Congress’s consideration of auto industry loan legislation in the fall of 2008, see CRS Report
R40003, U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring, coordinated by Bill Canis.
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Economic Stabilization Act20 (EESA) in the fall of 2008 to address the ongoing financial crisis.
The TARP statute specifically authorizes the Secretary of the Treasury to purchase troubled assets
from “financial firms,” the definition of which did not mention manufacturing companies.21
According to the U.S. Treasury Department,
The overriding objective of EESA was to restore liquidity and stability to the financial
system of the United States in a manner which maximizes overall returns to the taxpayers.
Consistent with the statutory requirement, Treasury’s four portfolio management guiding
principles for the TARP are: (i) protect taxpayer investments and maximize overall
investment returns within competing constraints; (ii) promote stability for and prevent
disruption of financial markets and the economy; (iii) bolster market confidence to increase
private capital investment; and (iv) dispose of investments as soon as practicable, in a timely
and orderly manner that minimizes financial market and economic impact.22
The authorities within TARP are very broad, and when Congress did not pass any specific auto
industry loan legislation, the Bush Administration turned to TARP for funding, arguing that to not
provide any assistance to Old GM (and Old Chrysler) would make the recession much worse. At
the time, President Bush reportedly said:
Under ordinary economic circumstances, I would say this is the price that failed companies
must pay, and I would not favor intervening to prevent the auto makers from going out of
business. But these are not ordinary circumstances. In the midst of a financial crisis and a
recession, allowing the U.S. auto industry to collapse is not a responsible course of action.23
When the Obama Administration took office, it built on this loan precedent and made additional
loans from TARP for Old GM of $2 billion in April and $4 billion in May 2009. These loans kept
Old GM’s operations alive as it went through a drastic restructuring prompted by the Obama
Administration’s Auto Task Force.24 (A detailed list of the approximately $50 billion in federal
assistance for combined GM can be found in the Appendix.)
Old GM’s Viability Plan of February 2009, which was a U.S. Treasury requirement to obtain
additional loans after the initial loan of December 2008, laid out a plan of recovery based on
changes in operations, labor costs, and other factors. President Obama rejected that plan at the
end of March 2009, saying it was insufficient for a total recovery of the company. The
Administration gave Old GM two months—until June 1—to devise a more thorough restructuring
and thereby qualify for more federal aid.
Throughout the spring of 2009, Old GM worked with a variety of stakeholders, including the
UAW, bondholders, creditors, dealers, and suppliers to devise a new restructuring plan that would
be approved by the Auto Task Force and avert bankruptcy. While the company succeeded in

20 P.L. 110-343, 122 Stat. 3765.
21 P.L. 110-343, Division A, Section 3.
22 TARP, “Monthly 105(a) Report to Congress,” U.S. Department of the Treasury, July 2010, p. 10.
23 John D. McKinnon and John D. Stoll, “U.S. Throws Lifeline to Detroit,” Wall Street Journal, December 20, 2008.
24 The Auto Task Force is a formal body chaired by Treasury Secretary Geithner and composed of officials from a wide
range of federal agencies, including Labor, Commerce, and Transportation. On a day-to-day basis, the task force was
managed for most of 2009 by Steven Rattner, the cofounder of a private equity firm. Since Steven Rattner left the task
force, it has been managed by Ron Bloom, a former investment banker and one-time adviser to the United Steelworkers
Union.
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reaching tentative agreements with most stakeholders, a group of creditors would not agree to the
terms offered, thus prompting GM to file for bankruptcy on June 1, 2009.
During the bankruptcy proceedings, the government provided a final installment from TARP: a
$30 billion loan to facilitate the transformation to a new, smaller company, bringing total federal
loans related to GM to more than $50 billion. While much of this $30 billion was expended
through the restructuring process, a majority of it was not, with $16.4 billion in liquid cash
remaining in an escrow account on September 30, 2009.25
Post-Bankruptcy General Motors
A new company emerged from the federal bankruptcy proceedings in July 2009. As shown below,
the General Motors Company was a smaller version of the General Motors Corporation that
entered bankruptcy. Many of the agreements that had been reached with stakeholders prior to
bankruptcy were accepted by the bankruptcy court judge and thus accelerated the court’s review
and decision-making. GM was established just 40 days after the Old GM entered the court
proceedings.26 GM differed in a number of important ways from the Old GM:
• Employment was cut. Old GM had 91,000 U.S. employees in 2008; the new GM
had 75,000 after bankruptcy.
• Plants were closed. Old GM announced that, of its 47 plants (in 2008), 13 would
close by 2010. The closed plants and machinery remained with Old GM.
• Brands were shed. Pontiac, Saturn, and Hummer brands were terminated, and
Saab was sold to a Dutch company.
• Retiree health care costs were transferred to the UAW. Old GM reached
agreement with the UAW in 2007 to transfer the financial responsibility for UAW
retiree health care to the union’s VEBA (Voluntary Employee Beneficiary
Association), thus removing $30 billion in obligations. Similar agreements were
reached with Ford and Old Chrysler. The Detroit 3 agreed to fund the VEBAs
with cash or stock. The union made additional concessions in 2009 negotiations.
The restructuring agreement gave the VEBA a significant ownership stake in GM
to aid in the funding of the VEBA because the company did not have the
financial resources to provide cash.
• Many expensive liabilities were jettisoned. Left with Old GM were
environmental liabilities estimated at $350 million for polluted properties,
including Superfund sites; certain tort liability claims, including those for some
product defects and asbestos; and contracts with suppliers with whom GM would
not be doing business.
Although GM was smaller and leaner than its predecessor, the federal government became its
majority owner. Through the bankruptcy process, the majority of the TARP loans made to GM
were converted into a 60.8% government ownership stake in GM; $6.7 billion of the TARP loans

25 General Motors Company, Form 10-Q Quarterly Report, April 7, 2010, p. 37.
26 Old GM—General Motors Corporation—remains in bankruptcy and is officially the Motors Liquidation Company,
with the assets and liabilities that were not attached to the new General Motors Company.
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remained outstanding after the bankruptcy and the federal government received $2.1 billion in
preferred stock.27 Following positive financial results in the quarters after emerging from
bankruptcy, GM used cash in the escrow account that originated from TARP during the
bankruptcy process to pay off the $6.7 billion in loans outstanding by April 2010.28 The $2.1
billion in preferred stock remains outstanding.
Elements of Federal Ownership
In addition to its ownership of GM, the government has acquired large ownership stakes in
Chrysler, GMAC/Ally Financial Citigroup, and AIG through TARP funds and other assistance
during the financial crisis. Table 2 details the government ownership stakes in these companies.
Table 2. Companies with Large Government Ownership Stakes
(Data current through September 30, 2010)
Outstanding
Current
TARP Outlays
TARP Funds
Government
Total TARP
Amount
Still to Be
Converted to
Ownership
Funds
Recouped by
Repaid to the
Ownership
Company
Share
Receiveda
the Treasury
Treasury
Stakes
GM
60.8%
$50.2 billion
$8.1 billionb
$2.1 billion
$40.6 billion
Chrysler
9.9%
$10.9 billion
$2.8 billionc
$5.1 billion
$3.5 billion
GMAC/Ally
FInancial
56.3%
$17.2 billion
$0
$13.3 billion
$3.9 billion
AIG
79.8%
$47.5 billion
$0
$47.5 billion
$0d
Citigroup
12.4%
$45 billion
$36.4 billione $0
$16.6
billion
Source: U.S. Treasury, Troubled Asset Relief Program: Monthly 105(a) Report – September 2010, October 10, 2010;
U.S. Treasury, Troubled Asset Relief Program: Dividends and Interest Report, October 11, 2010; U.S. Department of
the Treasury, Troubled Asset Relief Program: Two Year Retrospective, October 2010; Chrysler Group LLC, Third
Quarter 2010 Financial Statement, November 8, 2010.
a. Some of these companies received commitments for funds greater than the reported amounts, or other
TARP assistance. These figures are actual dol ars received (by GM and Chrysler before and after their
bankruptcies).
b. Includes repayments, interest, dividends and fees; see Appendix for detailed accounting.
c. $1.9 billion recouped from assets remaining after the bankruptcy of Old Chrysler; $403 million principal
repaid for warranty and supplier support loans; and $484 million in interest, dividends, and fees.
d. Government ownership of AIG results from a Federal Reserve loan that predates TARP.
e. $20 billion was repaid directly by Citigroup; $16.4 billion has been recouped from government sales of
Citigroup common stock, which are ongoing.

27 This preferred stock is an equity instrument, but it does not confer any control over the company and has a set
dividend rate to be paid by the company; thus it is similar economically to debt.
28 The SIGTARP report states, referring to GM’s repayment of $6.7 billion in TARP loans, that “all of these payments
were made, with Treasury’s permission, using funds from the escrow account that held TARP funds provided to GM.”
“Quarterly Report to Congress,” Office of the Special Inspector General for the Troubled Asset Relief Program
(SIGTARP), July 21, 2010, p. 108.
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Government operation of these companies has generally not been the goal of these acquisitions.
Instead, the goal was to provide compensation to the taxpayers for the assistance given to the
companies, while not hampering the companies going forward with large loan liabilities. The four
core principles guiding the management of the ownership stakes in private companies expressed
by the Obama Administration are as follows:
• The government has no desire to own equity stakes in companies any longer than
necessary, and will seek to dispose of its ownership interests as soon as
practicable.
• In exceptional cases where the U.S. government feels it is necessary to respond
to a company’s request for substantial assistance, the government will reserve the
right to set up-front conditions to protect taxpayers, promote financial stability,
and encourage growth.
• After any up-front conditions are in place, the government will protect the
taxpayers’ investment by managing its ownership stake in a hands-off,
commercial manner.
• As a common shareholder, the government will only vote on core governance
issues, including the selection of a company’s board of directors and major
corporate events or transactions.29
Compared with the other companies in which the government has a significant ownership stake,
the federal government stake in GM is unusual, however, in that GM is not publicly traded and is
majority-owned by the federal government. The size of the ownership stake gives the taxpayers
the largest stake in the company’s outcome, as well as the power to direct the company’s actions,
if it chooses to use this power. The fact that GM is no longer publicly traded complicates to some
degree the eventual disposal of the ownership stake. With publicly traded companies, it is
relatively straightforward to simply sell the government shares on the open market, although
given the size of the stock sales, some strategy is likely called for to avoid flooding the market
with more shares than would be demanded at a given time. An ownership share in a non-publicly
traded company theoretically could be sold directly to a willing buyer. In the case of GM,
however, the size of the company and future demands for capital suggest that an initial public
offering is a logical course of action.
Issues Arising in the GM IPO
The GM stock offering is one of many such offerings in 2010, and it will compete with these for
global investor capital. According to the Detroit News,
so far this year, 86 IPOs have been launched in the United States, raising $13 billion,
compared with 63 IPOs for all of last year that raised $21.9 billion, according to research
firm Renaissance Capital. GM joins a crowded list of companies looking to raise money this
year in IPOs, including Toys ‘R’ Us, consultant group Booz Allen Hamilton, restaurant

29 U.S. Treasury, “FACT SHEET: Obama Administration Auto Restructuring Initiative,” press release, June 1, 2009,
http://www.financialstability.gov/latest/05312009_gm-factsheet.html.
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Logan’s Roadhouse, car share service ZipCar and TV rating company Nielsen, filing to raise
money later this year.30
The largest IPO in U.S. history was credit card company VISA, Inc., in 2008, at $19.7 billion.31
As the U.S. Treasury begins to divest its 60.8% federal ownership stake in General Motors
Company, a number of public policy and finance issues will arise.
IPOs in the U.S. Auto Industry
Although the IPO market has been a major source of funds for U.S. startups for decades, the auto
industry in general has not been part of this Wall Street funding process. In the past 60 years,
there have been only two U.S. automaker IPOs: Ford Motor Company in 1956 and Tesla Motors
in June 2010.
Ford Motor Company. When it moved to become a publicly traded company in 1956, Ford had
been in business for 53 years as a privately held company controlled by members of the Ford
family. Henry Ford, the company’s founder, strongly opposed making his company publicly held.
He believed he would surrender too much control over the company’s operations to the vagaries
of the stock market and that such financing relieved the company of the need to cut internal waste
and costs.32
Nine years after Henry Ford’s death, Ford
A Different View of Publicly Traded Stock
Motor Company issued what was then the
The founders of Old GM did not have the same
largest stock issue ever offered. According to
reservations as Henry Ford about publicly traded stock:
one author who has chronicled the company
it has been owned by stockholders for most of its
and the Ford family, “it was the biggest stock
existence. The original General Motors Company,
issue ever. People stood in lines outside
founded in 1908, included Buick and Oldsmobile; Cadillac
Company was purchased in 1909. The company
brokerage houses to buy Ford stock, thus
reorganized in 1916 and changed its name to General
owning a piece of the company that still had
Motors Corporation;33 the name it held until it filed for
an almost magical quality for the average
bankruptcy in 2009. Its stock was traded continuously
American.” The 1956 IPO represented 22%
during that period, falling to a low of 71 cents per share
on the last day it traded publicly.34
ownership in the company at the time. Offered
publicly at $64.50, Ford shares closed at
$69.50 on the first day of trading.35

30 Robert Snell and David Shepardson, “GM Faces Rocky ‘Road Show’ on Stock Offering,” Detroit News, August 20,
2010.
31 The largest IPO in the world is the Agricultural Bank of China, at just over $22 billion, which was launched in
August 2010. “GM Files for IPO; Could Raise $10 Bln,” Wall Street Journal, August 18, 2010; “Agricultural Bank of
China Sets IPO Record as Size Raised to $22.1 Billion,” http://www.Bloomberg.com, August 15, 2010.
32 Henry Ford discussed his views on ownership in his autobiography, My Life and Work, printed by Doubleday, 1922.
See chapter XII, “Money—Master or Servant?,” p. 169 et seq. Also see “Henry Ford Never Wanted His Company to
Go Public,” Automotive News, June 15, 2003.
33 Flink, James J. and Niemeyer, Glenn A., “The General of General Motors,” American Heritage Magazine, August
1973.
34 On Friday, May 29, 2009, GM stock in after-hours trading sold for 71 cents per share. Source: “After 93 Years, G.M.
Shares Go Out on a Low Note,” New York Times, May 29, 2009, http://dealbook.blogs.nytimes.com/2009/05/29/after-
93-years-gm-shares-go-out-on-a-low-note/.
35 Quote and information on the IPO are from “Henry Ford Never Wanted His Company to Go Public,” Automotive
News, June 15, 2003. The article cites information on the IPO which is taken from Henry: A Life of Henry Ford II, by
(continued...)
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Tesla Motors. The most recent automaker to have issued an IPO was Tesla Motors in June 2010.
Tesla is a new entrant to the auto-making industry, founded in 2003 by a group of engineers in
California’s Silicon Valley who wanted to produce all-electric vehicles. Its first product, the Tesla
Roadster, debuted in 2008, with a retail price of $109,000. The company has sold about 1,000 of
these two-seater sports cars in the two years since production began. The Model S, a four-door
sedan planned for 2012—at less than half the price of the Roadster—will be built at the former
GM-Toyota NUMMI36 plant in Fremont, CA, which Tesla purchased in May 2010.
Having yet to turn a profit in its seven years, Tesla Motors needed capital to fund its expansion
and research and development (R&D) in electric vehicles. It raised capital from three sources:
• A $465 million federal loan37 from the U.S. Department of Energy for building
the Model S sedan.
• A joint agreement with Toyota in which Tesla hopes to learn modern
manufacturing techniques from Toyota while Toyota learns more about electric
vehicle technology. Toyota invested $50 million in the venture.38
• An IPO that raised $226 million by pricing its IPO at $17 a share (above the
anticipated range of $14 to $16) and selling a total of 13.3 million shares on June
29, 2010.39 Of this IPO, one analyst pointed out that Tesla may be applying its
technology to existing Toyota models:
… the Tesla IPO got off to a promising state [sic], rising to $30.24 in the early days of
trading. It has dropped close to half since then to about $17. It has occurred to investors that
the company’s electric cars are expensive to build, hold a tiny niche market at best, and lack
a dealer network or quality track record that helps sell cars in any volume. Tesla’s lifeline
may be to develop new electric versions of Toyota cars. Reuters reports that the two
companies have signed a letter of understanding to cover joint development of two or three
new vehicles for the world’s largest car company. On July 10, [2010,] Tesla stated “Toyota
will receive two prototypes this month….” While Toyota also aims to test an electric
Corolla, the RAV4 and RX are better suited to the weight of Tesla’s battery pack.40

(...continued)
Walter Hayes, Grove Publishing, June 1990.
36 The GM-Toyota joint venture—NUMMI—stood for New United Motor Manufacturing, Inc.
37 Loans have been available from the Energy Department to companies making cars and components in U.S. factories
that increase fuel economy at least 25% above 2005 fuel economy levels. The Energy Independence and Security Act
(P.L. 110-140, sec. 136) authorized up to $25 billion for these loans. The Consolidated Security, Disaster Assistance,
and Continuing Appropriations Act (P.L. 110-329, sec. 129), appropriated $7.51 billion to cover the subsidy ($7.5
billion) and administrative costs ($100 million) of the loans. For more information on this program, see CRS Report
RL34743, Federal Loans to the Auto Industry Under the Energy Independence and Security Act, by Bill Canis and
Brent D. Yacobucci.
38 Tesla Motors, “Tesla Motors and Toyota Motor Corporation Intend to Work Jointly on EV Development, TMC to
Invest in Tesla,” press release, May 20, 2010.
39 Eric Wesoff, “Update: Tesla Stock Price Falls Below IPO Price,” Greentechmedia, July 6, 2010,
http://www.greentechmedia.com/articles/read/tesla-ipo-gentlemen-start-your-drivetrains/.
40 Douglas A. McIntyre, “Toyota: Tesla’s Savior,” 24/7 Wall Street, July 12, 2010, http://247wallst.com/2010/07/12/
toyota-teslas-savior/?utm_source=nrelate&utm_medium=related&utm_campaign=related.
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What Is an IPO?
This section discusses the basics of an IPO, the attendant Securities and Exchange Commission
(SEC) new securities registration process, and the potential contours of the emerging GM IPO.
The Basics of an Initial Public Offering
An IPO occurs when a company sells common shares to investors in the public for the first time.
GM officials cite several reasons for conducting their IPO, including reducing the negative stigma
that some reportedly attach to GM ownership by the U.S. government. However, historically, the
central benefit from an IPO is the increased access to financial markets that it affords the
corporate issuer.
When a company decides to conduct an IPO, it selects an intermediary or intermediaries to
facilitate such a transaction. Intermediaries are usually investment banks who have experience in
helping firms “go public.” The investment banks that lead an IPO are known variously as
managing underwriters, lead underwriters, or bookrunners.
Key duties performed by the lead underwriters in the facilitation of an IPO include (1) helping the
issuing company to prepare and file the necessary securities public offering registration
statements with the SEC; (2) providing advice on the valuation of the company and the pricing of
the securities issue; and (3) helping to assemble (as well as participate in) a group of investment
banks and brokerage firms—the underwriting syndicate—whose aim is to sell shares from the
IPO offering to the investing public.
Led by Morgan Stanley and JP Morgan, other bookrunners in the GM IPO also include Bank of
America/Merrill Lynch, Goldman Sachs, Barclays Capital, Credit Suisse, Deutsche Bank, RBC
Capital Markets, Citigroup Global Markets, Barclays Capital, Banco Bradesco BBI S.A., CIBC
World Markets, Commerz Markets, BNY Mellon Capital Markets, ICBC International Securities
Limited, Itau BBA USA Securities, Lloyds TSB Bank, China International Capital Corporation
Hong Kong Securities, Loop Capital Markets, the Williams Capital Group, Soleil Securities
Corporation, Scotia Capital (USA), Piper Jaffray, SMBC Nikko Capital Markets, Sanford C.
Bernstein & Co., Cabrera Capital Markets, CastleOak Securities, GF Global Trading, C.L. King
& Associates, CRT Investment Banking, FBR Capital Markets, and Gardner Rich. With a total of
35 bookrunners, the GM IPO will reportedly have one of the largest numbers of joint bookrunners
to work on an IPO.41
Depending on the nature of their contract with an IPO issuer, bookrunners generally either (1)
absorb some of the risk of the issue by guaranteeing an offer price on the securities issue, known
as a “best effort deal” or (2) collectively purchase the shares from a company’s IPO issue and
then resell them to the investing public, known as a “bought deal.”
Based on the language in its August 2010 new securities registration filing with the SEC, GM
appears to have a “bought deal” contract with its 10 bookrunners.42 Various media reports also
indicate that each bookrunner will be compensated by an underwriting fee or gross underwriting

41 Shanny Basar, “Record Bookrunner Club Prepares GM Float,” Financial News, August 19, 2010, available at
http://www.efinancialnews.com/story/2010-08-19/gm-ipo-bookrunners.
42 Available at http://www.sec.gov/Archives/edgar/data/1467858/000119312510192195/ds1.htm.
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spread (a percentage discount on the eventual per share offer price for the issued securities) of
0.75%. The figure, which U.S. Treasury officials reportedly played a major role in negotiating,
would represent a steep discount from the 2% to 3% underwriting fee that is often charged for
large IPOs.43 (As a general rule, the fees tend to be inversely related to a deal’s size, with smaller
deals being subject to higher percentage fees.)44
Although it is not yet decided, various analysts predict that the current GM stakeholders are likely
to sell their stakes in a series of offerings whose combined value is likely to range between $10
billion and $20 billion, which would make the GM offering one of the world’s largest IPOs.45
According to the research firm Freeman Consulting, if the IPO raises about $20 billion, the
investment banks could net roughly $150 million in underwriting fees.46 Additional media reports
indicate that the total membership of the GM IPO underwriting syndicate that is being assembled
will probably not be finalized until late September 2010.47
The IPO Registration Process
With a few exceptions, the Securities Act of 1933 (subsequently referred to as the 1933 act)
requires that before securities are sold to the public, an issuing company must register the
issuance through a document filed with the SEC. That document is aimed at providing the
investing public with reliable and timely financial and business information about the company.
The most common registration statement is known as Form S-1, which bookrunners typically
assist the issuer in preparing and filing.

43 See, e.g., Aaron Lucchetti, et al., “GM Will Pay a Cut-Rate Price to Do Its New IPO,” Wall Street Journal, June 12,
2010, available at http://online.wsj.com/article/
NA_WSJ_PUB:SB10001424052748703509404575300430351563768.html. “Goldman Sachs Undercuts Rivals in GM
IPO as It Loses Top Role,” Businessweek, August 16, 2010, available at http://www.businessweek.com/news/2010-08-
16/goldman-sachs-undercuts-rivals-in-gm-ipo-as-it-loses-top-role.html, and “Taxpayers on GM Off Ramp with IPO,”
The Windsor Star, August 19, 2010, available at http://www.driving.ca/windsor/Taxpayers+ramp+with/3417484/
story.html?cid=megadrop_story. There are reports that one of the underwriters, Goldman Sachs, offered to take the cut-
rate 0.75% underwriters fee, which was lower than those proffered by other banks who became bookrunners, and that
subsequently U.S. Treasury officials imposed those terms on the other bookrunners who originally were going to get
heftier fees. Nick Bunkley and Bill Vlasic, “General Motors Files for an Initial Public Offering,” The New York Times,
August 18, 2010. In a joint bookrunner IPO like that being conducted by GM, bookrunners typically receive 30% to
40% of the revenue from the gross spread. Yunchun Hu, “Multiple Bookrunners in IPOs,” University of Florida PHD
Dissertation, 2007.
44 Some explain the underwriters’ willingness to accept such comparatively low fees in terms of the prestige it affords
them in being part of such a highly visible deal and how it is likely to place them in a favorable position to take part in
anticipated follow-on GM stock offerings.
45 See, e.g., Tom Krisher and Ken Thomas, “After Turbulent Year Following Bankruptcy, GM Lays Groundwork to
Sell Stock to Public Again,” Associated Press, August 19, 2010, and General Motors files for an IPO, August 18, 2010,
Renaissance Capital: IPO Home. Available at http://www.renaissancecapital.com/ipohome/news/General-Motors-files-
for-an-IPO-8396.html. According to some sources, the largest four global IPOs were the Agricultural Bank of China in
2010, at $22.1 billion; the Industrial and Commercial Bank of China in 2006, at $19.1 billion, NTT Mobile
Communications (Japan) in 1998, at $18.1 billion, and Visa (United States) in 2008, at $19.7 billion. Available at
http://www.renaissancecapital.com/IPOHome/Rankings/biggest.aspx and “GM Road Show to Begin After Elections:
Sources,” Reuters, September 1, 2010.
46 Clare Baldwin and Soyoung Kim, “From Fear to Greed, Banks Jostle for GM Deal,” Reuters, August 13, 2010.
47 Soyoung Kim, “GM Completes IPO Paperwork, Filing Expected,” Reuters, August 16, 2010, Available at
http://www.reuters.com/article/idUSTRE67B4JW20100816.
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There are two parts to Form S-1. The initial part of it is known as the prospectus, which contains
information on the issuer, the securities being offered, the manner of distribution, and the issuer’s
audited and unaudited financial statements as required by the 1933 act’s disclosure rules. The
prospectus is the primary marketing document for an IPO and is also known as a preliminary
prospectus or a red herring. A preliminary prospectus can only be issued for information purposes
to prospective investors while the SEC is reviewing Form S-1.
The remaining part of Form S-1 contains additional information on the issuing company and the
offering. This includes other expenses associated with the securities issuance, recent sales of
unregistered securities, information on the indemnification of the issuer’s directors and officers,
various exhibits, and financial statement schedules. This section does not have to be provided to
prospective investors.
The SEC’s review of an IPO registration statement may result in its immediate approval, but
issuers and their underwriters may need to amend the registration statement in response to SEC
deficiency memoranda that request that additional information be included. This back and forth
often means that SEC approval of an IPO registration statement can take several months. This
process ends when the SEC declares a company’s registration statement as “effective.” The
company may then be considered a public entity that is entitled to offer securities.
After this final SEC approval, an issuer’s management and underwriters mount a “road show,” a
weeks-long IPO promotional tour in which an issuer’s prospects are touted to prospective
institutional investor buyers of the offering, such as mutual funds, hedge funds, and pension
funds. (GM’s senior management, especially CEO Dan Akerson, would normally be prominently
featured in the road show.) During and after a road show, the issue’s underwriters also endeavor
to “build the book” on the offering—the process of gauging the level of investor interest and
investor pricing sentiment on an upcoming issue. Generally, issuers and underwriters strive for a
share price that results in an IPO being significantly oversubscribed, meaning that there is much
more demand than there are available shares. However, this pricing involves a balancing act of
sorts: if it is too low and the offer is heavily over-subscribed, then an issuer can “leave a lot of
money on the table”—but if it is too high and the offer is greatly undersubscribed, the
underwriters can take substantial financial hits.48
After arriving at an overall valuation for the issuer, and assessing the nature of an offering’s
potential supply and demand, bookrunners then arrive at a share price level for the IPO. Members
of an IPO syndicate generally offer certain allocations of the shares to institutional investor
clients. Historically, IPOs have tended to be underpriced, meaning that they tend to exhibit large
jumps in share price from the initial IPO price when they start their first day of trading on the
secondary markets.
Typically in an IPO, the last share orders are due the afternoon of the day before the stock is set to
be offered, which is usually the day in which an IPO’s final pricing is also announced. GM has
tentatively scheduled the IPO for November 18, 2010.49

48 During the road show, investors begin to place orders for the stock with each willing investor offering a price for a
specific amount of stock: While one investor may offer to buy 40,000 shares at $29 a share, another may offer to
acquire 70,000 shares at $26 a share. Chrissie Thompson, “Ins and Outs of the Stock Sale,” Detroit Free Press,
November 4, 2010, at http://www.freep.com/article/20101104/BUSINESS01/11040618/First-GM-execs-will-make-
their-pitch-then-investors-will-help-set-a-price.
49 Chrissie Thompson, “Ins and Outs of the Stock Sale,” Detroit Free Press, November 4, 2010.
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The Contours of GM’s Emerging IPO
On August 18, 2010, GM filed a Form S-1 registration statement with the SEC. The document
indicates that the offering will entail (1) common shares of GM stock, which will be sold by its
existing owners, including the U.S. Treasury Department; and (2) preferred shares of GM stock,
whose proceeds will go directly to GM. Reports suggest that one reason GM may have opted for
the preferred stock was that the stock (with the attributes of both common stock and debt) will
later be convertible to GM common stock. This option is thought to have particular appeal to
certain types of potential investors such as hedge funds.50 GM later filed amendments to the
initial Form S-1 registration statement.
The initial registration document indicated that a total of 500 million shares of GM common
stock would ultimately be available. Among other things, an amendment filed on November 3,
2010,51 indicated that GM’s initial IPO would involve 365 million common shares, 60 million
Series B preferred shares with an additional 54.75 million shares of common stock, and 9 million
shares of preferred stock that could be used for overallotment (additional shares that are sold to
accommodate a strong demand). GM also estimated that the IPO’s common stock would “be
between $26.00 and $29.00 per share” and that its Series B preferred stock would probably be
offered at a maximum of $50 a share.52
The amendment also indicated that the common stock had been approved for listing on the New
York Stock Exchange and the Toronto Stock Exchange, the leading Canadian exchange, meaning
that the common will likely be dual-listed.53
The GM IPO is, however, taking place in the midst of a historically weak IPO market. According
to some sources,54 between 2004 and 2007, there were more than 200 annual IPOs in the United
States. However, 2008 recorded only 43 such deals, and 63 were reported in 2009. That pace
continued to pick up in 2010, with 86 IPOs being recorded through early August. In addition,
according to press reports, Hoovers, a business data service, reported in October 2010 that the
number of U.S. IPOs increased 76% for the third quarter of 2010 compared with the third quarter
of 2009.55 Still, some analysts56 characterize the current IPO market as being in a state of
recovery. Two-thirds of the firms that went public between January and August 2010 reportedly

50 David Welch, Jeff Green, and Jeffrey McCracken, “GM Said to Consider Sale of Preferred Stock With IPO,”
Bloomberg, August 18, 2010.
51 General Motors, S-1/A 1 ds1a.htm Amendment No. 5 to the Form S-1, November 3, 2010, available at
http://www.sec.gov/Archives/edgar/data/1467858/000119312510246019/ds1a.htm#rom45833_19.
52 Ibid.
53 It is likely that GM intends to also be listed on the Toronto Exchange because of its large Canadian ownership and
manufacturing presence in Canada. There are reports that GM gave serious consideration to listing also on the Hong
Kong Stock Exchange as a way to underscore its expanding business interest in the booming Chinese auto market and
to enhance its attractiveness to the region’s growing investor pool. Observers, however, note that down the road, GM
could opt for a follow-on listing on the Hong Kong exchange. Vincent Fernando, “GM’s Using Its IPO To Replace
U.S. Government With Strategic Asian Investors,” Business Insider, August 21, 2010, http://www.businessinsider.com/
gm-ipo-hong-kong2010-8#ixzz0xSqK68kP.
54 See, e.g., Susan Tompor, “Bad Time for GM Stock Offering,?” Detroit Free Press, August 13, 2010.
55 “U.S. IPOs Outpace Last Year in Hoover’s Q3 2010 Scorecard,” Kansas City Star, October 6, 2010, available at
http://www.kansascity.com/2010/10/06/2281684/us-ipos-outpace-last-year-in-hoovers.html.
56 Ibid.
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sold shares of stock at prices below the proposed offering range. By contrast, companies in good
IPO markets are said to generally expect their IPOs to sell at the offered price range or above.57
In a reflection of conventional IPO practices, many analysts expect that the initial allocations of
GM shares will principally go to the syndicate underwriters’ mutual fund, hedge fund, and
pension fund clients. Some, however, predict that a number of smaller brokerage houses may also
receive some share allocations.
Going forward, there are questions about the extent to which retail investors will have direct
access to the initial offering. A number of analysts say that retail investors will not have access to
the initial allocations if they do not have a brokerage account or have an account with a brokerage
firm that lacks access to the GM IPO. Such potential investors will have to wait until the shares
begin trading on the exchanges. Others, however, say that some sources at GM have told them
that a sizable number of shares in the GM IPO are likely to be given directly to retail investors.58
As the GM IPO advances, other questions have arisen. It is not clear whether the share allocation
protocol will involve solely the traditional mix of institutional investors discussed above, or
whether it may also include some rather unconventional institutional investor allocations to so-
called “cornerstone investors.”59
Some sources report that GM officials have been considering a plan under which sovereign
wealth funds or pension funds could be cornerstone investors in the IPO. Media reports indicate
that discussions with potential investors could start after GM filed its registration statement with
the SEC. Investment banks have sought out cornerstone investors for some recent Asian IPOs,
most notably the Agricultural Bank of China’s $22 billion IPO, which also involved the
privatization of a large government-owned firm. It has been reported that prospective cornerstone
investors could be asked to make a commitment of between 2% and 10% of the GM IPO, which
could translate into cornerstone investors collectively holding 10% to 30% of the total GM IPO.60
In early October 2010, some news reports were indicating that investment bankers had been
meeting with several sovereign wealth funds and private investors in the Middle East and Asia to
ascertain their potential interest in the IPO.61
In early October 2010, Treasury Department officials reportedly indicated that they would not be
“directly” involved in GM IPO share allocation decision, leaving the area up to the underwriting
syndicate.62

57 Ibid.
58 “GM Mulls ‘Cornerstone’ Sales in IPO,” Reuters, August 16, 2010. In recent years, there have reportedly been
instances in which some IPO shares were allocated to retail individual investors because of the general softness of the
IPO market. Brian J. O’Connor, “Mass Pitch to Precede GM Stock Sale,” Detroit News, August 19, 2010.
59 Cornerstone investors are investors who commit to buying and holding major stakes in an IPO and who it is hoped
will attract more investors to large IPOs on the strength of those large stakes.
60 “GM Mulls ‘Cornerstone’ Sales in IPO,” Reuters, August 16, 2010. A cornerstone investor strategy involving
sovereign wealth funds could provoke potential controversy due to concerns that U.S. taxpayers effectively subsidized
GM to benefit offshore investors.
61 David Welch and Jeffrey McCracken, “GM Said to Approach Sovereign Wealth Funds to Boost Stock Sale,”
Bloomberg Businessweek, October 5, 2010.
62 Soyoung Kim and Clare Baldwin, “GM’s Coming IPO will be Priced to Entice Retail Investors, Sources Familiar
with the Offering Say,” Reuters, September 23, 2010.
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Reasons for Issuing the IPO in Fall 2010
General Motors and the Treasury Department argue that this is a good time for the company to
begin issuing shares of common stock. According to a Treasury Department report to Congress,
GM, the federal government and other shareholders agreed on October 15, 2009, that the
government would prompt the issuance of an IPO by July 10, 2010, “unless the Corporation is
already taking steps and proceeding with reasonable diligence to effect an IPO.” Moreover, the
U.S. Treasury hired Lazard Frères & Co. in early 2010 as a paid adviser in exploring a GM IPO.
On June 10, 2010, Treasury issued a press release stating “[The] exact timing of the offering will
be determined by [New] GM in light of market conditions and other factors, but will not occur
before the fourth quarter of this year.”63
Aside from the desire of the federal government to begin selling its shares in the automaker in
2010, GM would like to eliminate the perception among potential vehicle buyers that its vehicles
are not worth purchasing as long as it is a recipient of federal assistance or, as some have branded
it, “Government Motors.” Some auto industry observers and GM executives have stated that
widespread consumer hostility has cut into GM sales since bankruptcy: “Just a week ago
Whitacre told reporters that he would like the Treasury Department to sell its entire 61% stake in
GM at the time of its initial public offering later this year. He said the company was being hurt by
the stigma of being known as ‘Government Motors.’”64
In addition to canceling negative consumer perceptions, GM has other reasons for issuing an IPO
in the last half of 2010:
• Profitability and cash flow are positive. In the second quarter of 2010, GM
posted its largest quarterly profit since 2004: a net income of $1.3 billion on sales
of $33.2 billion, up from $865 million on $31.5 billion in sales in the first quarter
of 2010. Its cash flow grew from $1 billion in Q1 to $2.8 billion in Q2. GM’s
chief financial officer (CFO) sees earnings growth continuing, however at a
slower pace. In August 2010, he said, “I’m assuming the second half [of 2010]
will be lower than the first half,” and forecast “solid profitability for the year
even though second half results will moderate.”65
• GM has achieved a new, lower break-even point. Whereas Old GM needed a
strong U.S. auto sales market to make a profit or break even, GM has lowered its
cost structure. It can make money even in a low-volume car and truck market like
the current U.S. market of an estimated 11.5 million units in 2010.66 GM says its
break-even point is now U.S. seasonally adjusted annual sales of 10.5 million to
11 million units.67

63 “Quarterly Report to Congress,” Office of the Special Inspector General for the Troubled Asset Relief Program
(SIGTARP), July 21, 2010, p. 108.
64 “GM Getting a New CEO—Again,” CNNMoney.com, August 12, 2010.
65 GM CFO Chris Liddell, quoted in “GM, Ford: No Double Dip Recession,” http://www.theStreet.com, August 13,
2010.
66 U.S. auto sales forecast, “Forecast and Analysis: Latest Developments,” IHS Global Insight, July 28, 2010.
67 “Our Competitive Strengths,” Form S-1 Registration Statement, filed by General Motors Company with the
Securities and Exchange Commission, August 18, 2010, p. 3.
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• North American operations have turned the corner. Q2 2010 earnings in North
American operations (before interest and taxes) were $1.6 billion, an increase
from $1.2 billion in the first quarter and a turnaround from a $3.4 billion loss in
Q4 2009. Old GM’s North American operations had not turned in a strong
performance. As one reporter noted, “in an ironic reversal of what had become
common at GM in years past, North American operations are the engine of
current corporate earnings.”68
• Growth in many foreign markets is strong. GM notes that it is well positioned in a
number of high-growth foreign markets, particularly China, where it is the top
automaker and where a quarter of its worldwide sales originated in 2009.69
Chinese auto sales for 2010 have recently been revised upward for the year, from
15 million to 16 million units.70 GM expects its position in China, India, Brazil,
and other overseas growth markets to help fuel its turnaround. (The one
exception to this strong overseas performance is GM in Europe, where it
continues to have negative earnings.)
• GM’s new motor vehicles are seen as high-quality. Measurements of vehicle
quality include average transaction prices (i.e., if consumers are willing to pay
more for cars and trucks, the transaction prices rise), market share trends, and
third-party customer satisfaction ratings. Data suggest that GM has improved on
these benchmarks.
GM’s U.S. average car retail transaction prices in Q2 2010 averaged $25,900,
compared with $23,800 in the same quarter a year ago; similar increases were
seen in GM trucks and crossovers. In market share, GM’s global deliveries
amount to 11.6% of worldwide vehicle sales, up slightly from Q1 2010 and
similar to Q4 2009. In North America, GM points out the market share for its
four continuing brands (GM, Chevrolet, Buick, and Cadillac) grew from 18.6%
in Q4 2009 to 19.3% in Q2 2010.71
Some GM vehicles did well in a recent independent customer survey conducted
by the American Customer Satisfaction Index (ACSI). In 2010, two U.S. car
brands topped the list for the first time: Ford’s Lincoln/Mercury in first place and
GM’s Buick in second. BMW, Mercedes-Benz, and GM’s Cadillac were tied in
third place; Toyota’s Lexus was fourth; and Honda fifth. As ACSI said in its
release of the results, “It was not long ago when Detroit’s products were clustered
at the bottom of the industry. Although very few automakers improved this year,
the domestic ones are either steady or have lost less in customer satisfaction
compared to international competition. In this sense, the near future looks good
for Ford and General Motors. Satisfied customers tend to do more repeat
business, generate good word-of-mouth and don’t require greater price incentives
to come back.”72

68 “Best of 2010 May Already Be Behind GM,” Edmunds Auto Observer, August 12, 2010.
69 In 2009, China surpassed the United States for the first time to become the world’s largest retail auto market.
70 “China Auto Industry Lifts 2010 Sales Target to 16 Million Units,” People’s Daily Online, August 11, 2010.
71 Vehicle quality benchmarks are cited from GM Chart Set, “Q2 2010 Results,” General Motors Company, August 12,
2010.
72 Statement of Claes Fornell, founder of the ACSI, “ACSI: Detroit Tops Auto Industry for the First Time Ever,” ASCI,
August 17, 2010, http://www.theacsi.org/images/stories/images/news/aug2010_pressRelease.pdf.
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• New management has changed the direction of the company. When the Treasury
took the major ownership interest in GM in July 2009, it appointed five new
directors to the board and selected a new chairman, Ed Whitacre Jr. (the retired
chairman and CEO of AT&T). These changes at the top created an actively
engaged board of directors that has often challenged GM staff initiatives. In
2009, the board replaced then-CEO Fritz Henderson, turning his management
duties over to Whitacre, and reassigned Chief Financial Officer Ray Young,
replacing him with Chris Liddell from Microsoft. The board has overseen the
downsizing of both salaried and hourly employment.
On September 1, 2010, Chairman and CEO Whitacre stepped down as CEO, and
has said he plans to retire as chairman at the end of the year. The new CEO (and
chairman-designee) is Daniel Akerson, a GM board member and former
managing director at the Carlyle Group, a Washington, DC-based private equity
firm. Steven Rattner, the former Treasury Department official who oversaw the
government’s role in GM’s restructuring, said “Ed Whitacre put in place a very
strong team of people around him with very, very complementary skills….
having Dan Akerson on hand, who’s been involved in this for over one year, and
is an incredibly strong and tough manager which is exactly what this company
needs, is a great decision.”73
• Recent labor agreements have placed GM in near-parity with transplant labor
costs. Contracts negotiated with the UAW in 2007 and revised in 2009 have
reduced labor costs, an input that for many years favored the lower-wage, non-
union Japanese and European transplant auto manufacturers in the United States.
According to the Center for Automotive Research (CAR), GM’s total labor costs,
including benefits, stand at $58.15 an hour in 2010, compared with Toyota’s total
labor costs of $56.16 an hour. CAR notes that when new skilled and entry-level
workers are hired at GM in the next few years, the lower hourly pay and benefits
required by the UAW contract will further reduce GM’s total labor costs to just
over $48 an hour, well under what Toyota, Honda, and other non-U.S.
manufacturers pay.74 In addition, as mentioned earlier in this report, GM has
shifted many of the costs of the UAW retiree health care plan to the UAW’s
VEBA, further reducing GM’s costs for supporting UAW retiree health care.
• The economy and the stock market were relatively strong in the first half of 2010.
External factors affect the success of an IPO, in addition to the company’s
balance sheet. A strong economy and stock market are two such factors. For the
first half of 2010, the economic signals seemed to favor an IPO: the U.S.
economy was seen as gaining momentum and on its way out of recession; the
U.S. retail motor vehicle sales market recovered from its 2009 low point; and the
Dow Jones Industrial Average, a measure of stock market activity, rose by 70%
from March 2009 to April 2010. First-half 2010 factors pointing to an economic
recovery (that would be favorable to motor vehicle purchases) are shown in
Table 3.

73 “Steve Rattner on the Management Changes at GM,” Bloomberg Television interview reported on WallStreetPit.com,
August 12, 2010.
74 McAlinden, Sean, Executive Vice President and Chief Economist, Center for Automotive Research, “Picking Up the
Pieces: Restructuring of the North American Automotive Industry,” presented at CAR Management Briefing Seminars,
Acme, MI, August 4, 2010.
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Table 3. Signs of U.S. Economic Recovery in the First Half of 2010
All data represent economic activity in the United States
Economic Indicator
Time Period
Measurement
Unemployment Rate
April 2008
5.0%

April 2010
9.9%

June 2010
9.5%
Change in Gross Domestic Product (GDP)
Q IV 2008
-6.8%

Q III 2009
+1.6%
Q
IV
2009

+5.0%

Q II 2010a
+1.6%
Motor Vehicle Sales
1st 6 months 2009
4.8 million units

1st 6 months 2010
5.6 million units
Dow Jones Industrial Average
March 9, 2009
6,547
April
29,
2010

11,167
Source: Unemployment data are from “Labor Force Statistics from the Current Population Survey,” the Bureau
of Labor Statistics; GDP data are from “National Income and Products Account Table,” the U.S. Department of
Commerce, Bureau of Economic Analysis; U.S. auto sales are from “U.S. Car and Light-Truck Sales by Make, June
2010 and YTD,” Automotive News, July 1, 2010; DJIA data are from http://www.yahoo.com/finance.
a. Q II 2010 GDP growth was originally reported at 2.4%, but was revised downward by the Commerce
Department to 1.6% in late August 2010. “US GDP Growth Revised Down to 1.6% As Economy Cools,”
Christian Science Monitor, August 27, 2010.
Risks in the Issuance of the IPO
There are economic and business factors that may negatively influence the success of the GM
IPO, leading to a lower stock price and the likelihood, in such circumstances, that the U.S.
Treasury would not recoup its full investment in GM. In its recent filing with the SEC, GM makes
its case for the IPO and also provides an analysis of the factors that could adversely affect its
stock performance. In the S-1, GM notes that “any of the following risks could materially
adversely affect our business, financial condition, or results of operations. In such case, the
trading price of our securities could decline, and you may lose all or part of your original
investment.”75
Among the internal and external risk factors GM cites in its prospectus are the following
highlights. Quotes below are taken from the discussion of risk factors in GM’s SEC Registration
(S-1 filing), unless otherwise noted.

75 General Motors Company, “Risk Factors,” Form S-1 Registration Statement, August 18, 2010, p. 13.
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Internal Risks
• Perception of product quality and innovation. “Our ability to achieve long-
term profitability depends on our ability to entice consumers to consider our
products when purchasing a new vehicle.” The prospectus says GM has lost
market share “in part, due to negative public perceptions of our products” and
that changing consumer views will affect the company’s operations and finances.
Directly related to quality perceptions is the public’s view of GM’s innovations
and new technologies. Its ability to successfully market smaller cars, hybrids, and
electric and other energy-efficient vehicles, such as the Chevrolet Volt that debuts
this fall, will affect GM’s stock price.
• Ability to further reduce costs. Ongoing cost reduction and productivity
improvement remain keys to sustained profitability, especially in North American
and European operations. “Reducing costs may prove difficult due to our focus
on increasing advertising and our belief that engineering expenses necessary to
improve the performance, safety and customer satisfaction of our vehicles are
likely to increase.” In addition, the prospectus says costs could rise if dealer
terminations and consolidations do not meet their targeted savings.
• Generating adequate cash flow. Automakers require substantial liquidity to
invest in R&D and produce and market new vehicles. The prospectus states that
GM has adequate liquidity now to operate its business, but that in the future,
“inadequate cash flow could materially adversely affect our business operations.”
• Restructuring of GM European operations. GM’s European operations have
not been restructured as the North American operations were last year. GM
initially sought to sell its European operation; however, the board of directors
then changed course and resolved to retain those operations, while cutting costs
and increasing investments there. The European operations are a large part of
GM, and the prospectus notes that “we cannot be certain that we will be able to
successfully complete any of these restructurings.”
• Funding of the GM defined benefit pension plan. According to the S-1
registration statement filed with the SEC, GM’s pension plan for its U.S. and
non-U.S. hourly and salaried employees is underfunded by $27.4 billion. The
prospectus states that “we may need to make significant contributions to our U.S.
pension plan in 2014” and that interest rates, benefits levels, and government
requirements will have an impact on their performance.
• Labor union resistance and additional VEBA payments. Most hourly workers
at GM facilities in the United States, Canada, and Europe are covered by
collective bargaining agreements. The contract with the UAW expires in 2011,
and “while the UAW has agreed to a commitment not to strike prior to 2015, any
UAW strikes, threats of strikes, or other resistance in the future could materially
adversely affect our business as well as impair our ability to implement further
measures to reduce costs and improve production efficiencies.”
GM and the UAW agreed in the 2007 and 2009 contracts that the hourly workers’
retiree health plan would be turned over to a VEBA and managed by a UAW
trustee. GM is still obligated to make payments to the VEBA going forward,
including $1.4 billion in each of 2013, 2015, and 2017.
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• New management team. With the departure of Chairman and CEO Ed Whitacre
Jr. this fall, GM will be faced with a new top executive who has limited auto
industry experience. Incoming Chairman and CEO Dan Akerson has served on
the GM board since July 2009; his previous experience was in the telecom
industry and private equity management. If Akerson and other new management
are unable to quickly learn about the auto industry, “and as a result are unable to
provide effective guidance and leadership, our business and financial results
could be materially adversely affected.”
• Other issues affecting the price of GM’s common stock. The perception that
GM’s new preferred stock could be converted to common stock could adversely
affect the sale of common stock and hurt GM’s ability to raise capital. In
addition, GM does not have a plan to issue dividends on its common stock, which
might adversely affect some potential investors.
External Risks
• Auto sales volume and financing. GM’s business is sensitive to the pace of auto
sales in the United States and its major markets. “Many of the economic and
market conditions that drove the [2008-2009] drop in vehicle sales, including
declines in real estate and equity values, increases in unemployment, tightened
credit markets, depressed consumer confidence and weak housing markets,
continue to impact sales. In addition, recent concerns over levels of sovereign
indebtedness have contributed to a renewed tightening of credit markets.”
U.S. auto sales are stronger than in 2009, but considerably below the average
sales of more than 16 million vehicles a year seen in the earlier part of this
decade. The outlook for the near-term strength of the economic recovery has
become uncertain, and some analysts have trimmed their U.S. retail sales forecast
from more than 11.8 million vehicles to 11.5 million (for 2010) and from 13.6
million to 13.2 million (for 2011).76 A weaker U.S. retail auto market could affect
investors’ views of GM’s stock offering.
In addition, GM’s consumers and dealers depend on adequate capital to finance
auto sales. GM recently purchased AmeriCredit so it would once again have a
captive finance company, but it is not known if this new financing entity will
close the gap in financing needs for GM dealers and consumers.77
• Price of gasoline. When gasoline sold for more than $4 a gallon in 2008, many
consumers turned away from the larger, more profitable vehicles produced by
GM, Ford, and Chrysler and toward cars produced by Japanese and Korean
competitors. Should gasoline rise to higher levels in the future, GM’s market
share and profitability might be adversely affected again.
• Supplier base and raw material pricing. Some suppliers continue to have
difficulty obtaining lines of credit to finance their material purchases. Further
turbulence in the supplier base could affect GM’s ability to produce cars in a

76 “Forecast and Analysis: Latest Developments,” IHS Global Insight, July 28, 2010.
77 For dealer and consumer financing, GM intends to continue to utilize Ally Financial (formerly GMAC), the majority
of which is owned by the federal government. According to the GM prospectus, Ally’s credit rating has been
downgraded in recent years.
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timely way. In addition, substantial increases in the prices of raw materials such
as steel, aluminum, and copper could reduce profitability.
• Government-imposed costs. GM foresees a wide range of new regulatory costs
in major markets around the world, especially associated with government-
mandated greenhouse gas emissions reductions, vehicle safety, and fuel economy.
• Executive compensation limits. Under federal law,78 compensation to the top
level of GM executives has been reduced since the company received TARP
funds. According to the prospectus, the continuing salary caps may interfere with
GM’s ability to retain and hire employees “whose expertise is required to execute
our business plan while at the same time developing and producing vehicles that
will stimulate demand for our products.”
• Increased competition and slower economic growth in China. A quarter of
GM’s sales originated in China in 2009, and the company is the largest auto
company in that country. But competition is intensifying, and “increased
competition may result in price reductions, reduced margins and our inability to
gain or hold market share.” According to some analysts, because of slow growth
in the United States and Europe, and due to the “Chinese government’s expected
further pullback on stimulus, China’s growth is likely to moderately decelerate.
As such, IHS Automotive expects China’s growth to accelerate to 11.0% y/y in
2010 before pulling back to 8.6% y/y in 2011.”79
• U.S. and world economic trends. The majority of GM’s sales take place outside
the United States, so its future financial success hinges on global economic
trends, especially in China, Brazil, and India. Economic downturns, costly new
government mandates, and political and economic instability in overseas markets
will affect GM’s financial standing.
Within the United States, renewed concern about the strength of the recovery
may affect investors’ views on purchasing large blocks of GM stock. For the
week ending August 14, 2010, unemployment claims unexpectedly rose to more
than 500,000 for the first time since November 2009. Other economic indicators
have turned less positive as well: “A regional business survey by the Federal
Reserve Bank of Philadelphia found a sharp drop in its manufacturing index—a
disappointment in that the manufacturing sector had been adding jobs in recent
months. And a report from The Conference Board said its index of leading
economic indicators rose a scant 0.1 percent in July after dipping a revised 0.3
percent in June. The lack of job growth fits in an economy that grew at a 3.7
percent annual pace in the first quarter this year, but sagged to a 2.4 percent
growth rate in the April-June period.”80
Adding to the economic concerns was a late August report by the National
Association of Realtors saying that July 2010 home sales were at a 15-year low81

78 Required of TARP-assisted companies by Section 111 of the Emergency Economic Stabilization Act of 2008, P.L.
110-343.
79 “Forecast and Analysis: Economic Summary for Asia-Pacific,” IHS Global Insight, July 7, 2010.
80 The 2.4% GDP growth rate for the second quarter of 2010 was later revised downward to 1.6%. “Rise in Jobless
Claims Darkens the Economic Landscape,” Kansas City Star, August 19, 2010.
81 Lucia Mutikani, “US Home Sales at Multiyear Lows,” Reuters, August 25, 2010.
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and remarks by the president of the Chicago Federal Reserve that the risks of a
double-dip recession have increased.82
Putting the summer economic news into perspective, one news report cited the
views of an auto industry analyst: “‘This is going to be harder than it would have
been if the economy and the auto market were in better shape,’” said Joe
Phillippi, principal of AutoTrends Inc., a consulting firm in Short Hills, New
Jersey. “‘Every week, people are ratcheting down their outlook for the economy
and that will affect the price of this deal.’”83
Recouping Federal Funds Invested in GM
As detailed in the Appendix, the government through TARP has aided the combined Old GM and
GM with more than $50 billion in loans since December 2008. Of this amount, $7.4 billion was
repaid in installments, completed in April 2010, and approximately $0.8 billion has been paid in
interest, dividends, and fees. An additional $2.1 billion of the loans was converted into shares of
preferred stock, which are held by the U.S. Treasury. The approximately $40.7 billion remaining
was effectively converted into a 60.8% equity stake. The TARP authorization to purchase new
assets or make new commitments expired on October 3, 2010, but Treasury has continuing
authority to manage the equity in GM and other TARP assets.
For federal taxpayers to break even on the investments in GM, the company’s market
capitalization would have to be approximately $67 billion.84 Table 4 presents the market value of
GM stock for the past 10 years.

82 Jeff Cox, “Economy Caught in Depression, Not Recession: Rosenberg,” http://www.CNBC.com, August 24, 2010.
83 “GM Offering Tests Investor Confidence in Market Share, Earnings,” Bloomberg Business Week, August 19, 2010.
84 60.8% of $67 billion approximately equals the $40.7 billion in loans that were converted to common stock. Treasury
would still own the $2.1 billion outstanding in preferred shares.
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Table 4. Market Value of General Motors Corporation (Old GM), 2000-2009
Market Capitalization
Market Capitalization
Date
(nominal value, $ billions)
(real value, $ billions in 2010)
2009 $2.2
$2.2
2008 $10.6
$10.7
2007 $18.1
$19.0
2006 $11.9
$12.9
2005 $16.0
$17.9
2004 $27.3
$31.5
2003 $17.9
$21.2
2002 $47.5
$57.6
2001 $48.1
$59.2
2000 $63.8
$80.1
Source: Fortune magazine, annual rating of Fortune 500 firms, 2000-2009. Inflation adjustment by CRS using the
Consumer Price Index from the Bureau of Labor Statistics.
Notes: Market capitalization reflects the outstanding number of shares of common stock multiplied by the price
per share. Fortune publishes their values in May of each year, based on market prices on particular dates in
March.
Adjusted for inflation, the reported market value of Old GM in the past 10 years has exceeded
$67 billion in only one year. Whether investors view the new company today as favorably as they
did Old GM in the year 2000, however, is an open question.
Based on recent estimates, the outlook for the federal government recouping its investment in
GM is not clear. In May 2010, the Treasury released estimates on the combined TARP support for
the automakers, indicating a $24.6 billion combined loss on the government investment in GM,
GMAC/Ally Financial, and Chrysler. In October 2010, new estimates placed the loss at $17
billion, primarily due to improvements in the outlook for GMAC/Ally Financial. The Treasury
Department did not specify how it expected the losses to be apportioned among the three
companies, but it seems likely that the projections include some losses from the government
investments in GM.85

85 Loss estimates from U.S. Treasury, Summary Tables of Trouble Asset Relief Program (TARP) Investments as of
March 31, 2010, released May 25, 2010, available at http://financialstability.gov/docs/
TARP%20Cost%20Estimates%20-%20March%2031%202010.pdf., and Troubled Asset Relief Program: Two Year
Retrospective, October 2010, available at http://www.financialstability.gov/docs/
TARP%20Two%20Year%20Retrospective_10%2005%2010_transmittal%20letter.pdf. The combined assistance
outstanding for two of the three companies—GMAC and Chrysler—totals approximately $25.4 billion, that is, just
$800 million more than the combined estimated loss in May 2010 for all three companies.
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Appendix. Federal Financial Support for General
Motors Through the Troubled Asset Relief Program
Table A-1. Chronology of Federal Aid Through August 10, 2010
Amount
Date Recipient/Source
($ in billions)
December 2008
Old GM
$13.40
April 2009
Old GM
$2.00
May 2009
Old GM
$4.00
GM Warranty Program
$0.36
June 2009
Old GM/GM
$30.10
April 2009-April 2010
Old GM Supplier Receivablesa $0.29
Total Funds Loaned

$50.15
Repayment of Principal
July 2009
Repayment for Warranty Program
$0.36
November 2009
Partial repayment of Supplier Receivables loans
$0.14
December 2009/January 2010
Partial debt repayment
$1.03
February 2010
Partial repayment of Supplier Receivables loans
$0.10
March 2010
Partial debt repayment
$1.00
April 2010
Final debt repayment
$4.68
Final repayment of Supplier Receivables loans
$0.06
Total Repaid

$7.37
Interest, Dividends, and Fees Paid
December 2008-April 2009
Interest on Old GM loans
$0.14
April 2009-April 2010
Interest for GM Supplier Receivables
$0.01
March 2010
Additional Note for GM Supplier Receivables Program
$0.05
October 2009-April 2010
Interest on GM loans
$0.34
September 2009-September 2010
Dividends on Preferred Stock
$0.22
(ongoing quarterly payments)
Total
$0.76
Sources: U.S. Department of the Treasury, Troubled Asset Relief Program (TARP), Transactions Reports, various
dates, and Troubled Asset Relief Program (TARP), Dividends and Interest Report, various dates.
Note: In December 2008, the U.S. Treasury provided $884 million to assist GM in GMAC’s rights offerings,
separate from the $13.4 billion loaned for GM’s operations. While this was provided to GM, it assisted GMAC
and is generally tallied as GMAC assistance.
a. The original April 2009 Automotive Supplier Support Program commitment was $3.5 billion for use with
GM suppliers. This commitment was reduced to $2.5 billion in July 2009. Ultimately approximately $290
million of the $2.5 billion commitment was used.

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Author Contact Information

Bill Canis
Gary Shorter
Specialist in Industrial Organization and Business
Specialist in Financial Economics
bcanis@crs.loc.gov, 7-1568
gshorter@crs.loc.gov, 7-7772
Baird Webel

Specialist in Financial Economics
bwebel@crs.loc.gov, 7-0652

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