General Motors increased the size of its convertible preferred stock offering by $1 billion Tuesday, strengthening the automaker's balance sheet as the U.S. government attempts to break even on its controversial investment, as reported by CNBC.
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2010 Chevy Aveo
The new size of GM's Series B mandatory convertible junior preferred stock offering would be $4 billion, consisting of 80 million shares, the company said Tuesday.
The top U.S. automaker also confirmed it would increase the estimated price range for its much-anticipated initial public offering, to between $32 and $33 per share from the previously estimated $26 to $29 per share. The move to the higher range represents an 18 percent increase at the midpoint.
CNBC reported on Monday that GM was expected to raise its IPO price and that it could offer additional preferred shares based on strong investor demand.
A higher GM share price and an increased offering size means the initial loss to U.S. taxpayers from the bailout of General Motors will be more limited than initially thought. The U.S. Treasury owns nearly 61 percent of GM as a result of its $50 billion taxpayer-funded bailout.
Based on a diluted share count of 1.9 billion, $33 per share would give GM a market value of about $63 billion. GM needs a market value of roughly $70 billion for U.S. taxpayers to break even.
The New GM
The final terms for both offerings will be determined when GM prices its IPO, the company said, which is expected to be on Wednesday and it will begin trading on the New York and Toronto Stock Exchanges on Thursday.