General Motors Files for an Initial Public Offering

DETROIT — General Motors filed Wednesday for a landmark public stock offering that would let the federal government begin selling off its stake in the automaker as well as raise money for G.M.’s turnaround.

G.M. said that it would offer both common stock and preferred stock in the offering, which could begin as early as October, when the Obama administration will be seeking to portray its aid to the auto industry as a success before midterm elections in November.

The common shares will be sold by G.M.’s current shareholders, the largest of which is the federal government. It exchanged about $43 billion in aid to G.M. for a 61 percent interest in the automaker.

G.M. will also offer preferred shares, which have a fixed return similar to a dividend, to institutional investors. Proceeds from the preferred shares will be used to finance operations and improve G.M.’s balance sheet.

The automaker will not sell any common shares directly, and therefore will not generate any money from them.

G.M. did not set a price range for its shares, which will trade on the New York Stock Exchange and the Toronto Stock Exchange. For the government to fully recover its investment in G.M., the Treasury Department would have to sell its 304 million shares at an average price of about $141 each.

The Treasury is expected to sell enough stock in the initial offering to bring its overall ownership position in G.M. below 50 percent — freeing the automaker of the stigma of being called “Government Motors,” which executives have said is hurting its reputation in the marketplace. G.M.’s 734-page filing said taxpayers would “continue to own a substantial interest in us following this offering.”

The Treasury, in a statement on Wednesday, said it would “retain the right, at all times, to decide whether and at what level to participate in the offering.” The statement said the offering would not include the government’s preferred G.M. shares, worth $2.1 billion.

The stock offering has been a top priority both for G.M.’s management and the Obama administration, which orchestrated the automaker’s bankruptcy last year.

“There’s always a trade-off between getting out quickly and getting out at the highest possible price,” said Steven L. Rattner, the former head of President Obama’s auto task force. “The priority for the government is getting out quickly.”

Taxpayers have poured about $50 billion into G.M. since late 2008, when the struggling automaker was careening toward insolvency. The company has already repaid about $6.7 billion in loans, but most of the rest was converted into equity and can be repaid only by selling those shares.

G.M. did not specify how many of its 500 million outstanding shares would go on the market at first, saying that would depend on market conditions and other factors.

A little more than a year since its bankruptcy, G.M. has managed to earn $2.2 billion in the first half of 2010. In the four and a half years leading up to the Chapter 11 filing, it lost a total of $88 billion.

“A successful I.P.O. will be even more evidence that the steps the government took in 2008 and 2009 were good for workers, good for Michigan and good for the nation,” Senator Carl Levin, Democrat of Michigan, said in a statement. “I’m optimistic this success story is going to keep getting better.”

The offering has the potential to be the second-largest in United States history, after that of the credit card giant Visa, which raised more than $19 billion in March 2008.

The lead underwriters are Morgan Stanley, JPMorgan Chase, Bank of America and Citigroup. They are expected to earn a total of $120 million on the deal, about one-quarter what such an offering might normally generate, because another bank, Goldman Sachs, offered to take a cut-rate fee and the Treasury imposed those terms on the banks it selected to play top roles.

Though the starting price for G.M.’s stock is unknown, more successful introductions of new vehicles should generate continued profits and increasing share values throughout 2011, said James Bell, executive market analyst with the automotive information firm Kelley Blue Book. Mr. Bell said the government did not need to rush the sale of its full stake in the company.

“I don’t think the general consumer cares how much stake the government still has in G.M., as long as consumers see positive progress in the company,” Mr. Bell said.

Some analysts say they believe G.M. may be moving too quickly to go public amid continued economic volatility.

“I don’t think the financial markets are even near the ideal set of conditions for an I.P.O. of this magnitude,” said Jesse Toprak, vice president for industry trends at TrueCar.com, which tracks industry sales and pricing. “By waiting for the financial markets to stabilize, they would have the potential to earn more.”

G.M.’s filing listed 31 “risk factors” that it faces, including economic conditions, its ability to attract consumers into its dealerships and its money-losing European operations. It also notes that several top officials, including the incoming chief executive, Daniel F. Akerson, “have no outside automotive industry experience” and that G.M.’s performance could be affected if they “are unable to provide effective guidance and leadership.”

Last week, Edward E. Whitacre Jr. revealed plans to step down as chief executive on Sept. 1 and as chairman by year’s end. He will be succeeded in both roles by Mr. Akerson, a G.M. director appointed by the Treasury last year after the carmaker emerged from bankruptcy.

Mr. Akerson, a former telecommunications executive currently with a private equity firm, the Carlyle Group, will be G.M.’s fourth chief executive since March 2009.

Though Mr. Whitacre was not expected to stay on for much longer, his departure had not been expected until after the share sale took place. With the change in leadership, G.M. will be seeking to assure potential investors that Mr. Akerson will provide stability at the top.

“The new G.M. is on the right track,” Mr. Whitacre said last week when he announced his plans to retire.

By eliminating most of its debt in the reorganization, G.M. has been able to generate profits even though sales remain near the lowest levels in decades. It is operating with fewer plants and workers, and its vehicles are commanding higher prices.