When General Motors emerges from bankruptcy protection, it will technically be a brand new, privately held company, yet it will be more publicly owned than ever, with taxpayers holding a 60 percent stake.
GM executives say the company will continue to release regular financial statements after it goes private, even though technically it will no longer have an obligation to do so.
"There will continue to be a significant level of disclosure," Chief Financial Officer Ray Young told Detroit radio station WJR-AM on Thursday. "In fact the new GM will be the most public private company."
The Detroit automaker filed for bankruptcy protection on Monday and is hoping to emerge in 60 to 90 days, smaller, leaner and less burdened with debt. Its ownership structure will completely change: The Treasury Department, which is bankrolling the bankruptcy with $30 billion, will own 60 percent, while the Canadian government will take 12.5 percent in exchange for its financing.
GM's other stakeholders will include the United Auto Workers, with a 17.5 percent stake, and GM's bondholders, who will get a 10 percent share. GM's current shares are expected to become virtually worthless once the company sells its best assets to a "New GM" and liquidates the rest in bankruptcy court.
Without publicly traded shares, the automaker will no longer have to file regulatory documents that disclose quarterly earnings, major business transactions or executive compensation _ even though as a nationalized company it will be more publicly owned than ever.
"If it's not publicly traded, then it doesn't fall under the requirements of the SEC, unless the government wants it to follow the requirements of the SEC," said Joshua Ronen, a professor of accounting at New York University's Stern School of Business.
Eventually, the "New GM" plans to hold an initial public offering of stock, allowing the company to trade publicly again, and freeing the government and the UAW to sell off its stake to individual investors.
But it remains unclear how soon that will happen. The White House has given no timetable for selling the government's stake, and Young, the CFO, has ruled out an IPO until the first half of 2010 at the earliest.
GM has committed to remain transparent throughout the bankruptcy process. In full-page newspaper ads Wednesday, CEO Fritz Henderson wrote, "Over the coming days, months and years, we will prove ourselves by being more transparent, more accountable and, above all, more focused on you, our customer."
While the SEC strictly regulates the content of quarterly earnings and other financial statements, the rules governing privately held companies are looser. For example, private companies do not have to provide a so-called management discussion and analysis section when their shareholders request financial information, Ronen said. That section requires a company to elaborate on its detailed financial tables in plain English.
When the private-equity firm Cerberus Capital Management bought a majority stake in Chrysler and took it private in 2007, that automaker also stopped issuing quarterly financial statements.
Analysts then were left to extrapolate on the health of the company based on quarterly statements from the publicly traded German automaker Daimler AG, which held a stake in Chrysler until April.
Eventually, Chrysler began issuing limited financial statements to the public, but they were not nearly as detailed as the disclosures required by public companies.
The New York Stock Exchange delisted GM's shares after the company's bankruptcy filing, but they continue to trade for about 67 cents on the over-the-counter Pink Sheets market under the ticker "GMGMQ."