GM's Union Making Out Much Better than US Taxpayers on GM Stock Sale

No surprise here. It really pays to have their best friend at the White House.

From The Washington Times on November 25, 2010 [Emphasis is mine]:

General Motors Co.'s recent stock offering was staged to start paying back the government for its $50 billion bailout, but one group made out much better than the taxpayers or other investors: the company's union.

Thanks to a generous share of GM stock obtained in the company's 2009 bankruptcy settlement, the United Auto Workers is well on its way to recouping the billions of dollars GM owed it — putting it far ahead of taxpayers who have recouped only about 30 percent of their investment and further still ahead of investors in the old GM who have received nothing.

The boon for the union fits the pattern established when the White House pushed GM into bankruptcy and steered it through the courts in a way that consistently put the interests of the union ahead of many suppliers, dealers and investors — stakeholders that ordinarily would have fared as well or better under the bankruptcy laws.

"Priority one was serving the interests of the UAW" when the White House's auto task force engineered the bankruptcy, said Glenn Reynolds, an analyst at CreditSights. The stock offering served to show once again how the White House has handsomely rewarded its political allies, he said.

The union's health care and pension trust fund earned $3.4 billion through the sale of one-third of its shares in GM last week. Analysts estimate that it would break even if it sells the remaining two-thirds of its shares at an average price of $36 — close to where the stock traded shortly after the offering hit the market. GM shares closed at $33.45 on Wednesday.

For taxpayers to break even, by contrast, the stock would have to rise to at least $52 and by some estimates as high as $103 — levels that would take years to achieve.

In any event, after selling one-third of its shares last week, the U.S. Treasury has agreed not to sell any more of its GM stock for another six months, while the union fund is free to keep selling its shares.

For the full article, follow the link.

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GM IPO Today - Sell the News

I hope Turbo Timmy sold at the opening pop... The market maker for the IPO today is Getco, a Chicago-based high-frequency trading giant.

The lead underwriters for the IPO, who are set to collect millions of dollars, are J.P.Morgan Chase, Morgan Stanley, Bank of America Merrill Lynch, and Citigroup. There are 35 underwriters for this IPO, after UBS got dropped.

Their work is done now, having managed a pop above the IPO price. Nothing new here, move along...




And the supposed architect of this amazing turnaround 'narrative', Steven Rattner, is being charged with bribery by NY Attorney General Andrew Cuomo, who also wants to ban Rattner from the securities industry for life. But no one gets punished as long as they are the ruling elite or well connected to the ruling elite. Rattner will probably proclaim that he will fight this unjust allegations, and quietly settle with a few million dollars.

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GM IPO Update: $30-Plus a Share

according to Reuters:

NEW YORK (Reuters) - Strong investor demand is expected to drive the pricing of General Motors Co's (GM.UL) initial public offering to $30 per share or higher, above the initially proposed range, two people familiar with the matter said on Monday.

GM earlier filed to sell shares for $26 to $29 each.

A higher per-share price reflects growing investor confidence about the top U.S. automaker, which emerged from a U.S. government-financed bankruptcy last year with sharply lower costs and higher profit potential.

The new GM is set to trade on Thursday on the New York Stock Exchange and the Toronto Stock Exchange.

Hyping is on, of course, as one pundit who frequently appears in CNBC and TheStreet.com says "Buy GM".

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GM IPO's Market Maker Is a Chicago-Based HFT Firm

To me, it somehow perfectly captures the state of the financial market today.

GM, aka Government Motors, will have its post-restructuring IPO on Thursday. US taxpayers were forced to pay for the rescue and restructure, and a Chinese auto company backed by the Chinese government is set to acquire a chunk of the new GM shares.

The designated market maker to ensure the IPO runs smoothly is a Chicago-based firm, Getco, one of the largest high-frequency trading firms in the US (and probably in the world).

Getco has been busy doing the "regulatory capture", hiring ex-SEC officials, ex-Federal Reserve officials, even the ex-SEC chairman.

As Zero Hedge's Tyler Durden says, the Obama government is doing its best to make sure that "the worst IPO in history, that of Government Motors of course, will not be DOA."

Who's more suited than the HFT firm for that purpose, to buy and sell and buy and sell about 5000 times per second to provide "liquidity"?

What a joke.

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China's SAIC Motor to Be GM IPO Investor

After the US taxpayers were made to pay to "save" GM and "save US auto jobs" (which by the way Prez Obama admitted would be gone forever), US Government Motors is likely to sell equity to its Chinese-government-owned partner, SAIC Motor Corp, in the upcoming IPO.

Reuters reports:

Nov 10 (Reuters) - General Motors Co [GM.UL] is in the final stage of talks to sell equity to long-time Chinese partner SAIC Motor Corp (600104.SS) in conjunction with its landmark initial public offering, two people familiar with the matter said.

The two government-funded automakers are currently finalizing how much of a stake SAIC would buy in the top U.S. automaker after discussions involving technology sharing and SAIC's ambitions to move beyond the China market, the sources said.

On the side note, guess who's been suddenly popping up in the financial news media: ex-Car Czar and Wall Street hedge fund manager Steven Rattner. Mr. Rat is back, to shine the light upon his fine leadership in turning around GM on the eve of the IPO, no doubt.

Chutzpah. These people cannot help themselves.

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