General Motors should focus on making money and repaying US Treasury loans before turning to public markets to sell the taxpayer's stake in the automaker, a senior government official said.
Ron Bloom, head of the Obama administration's autos task force, nevertheless told Reuters that an initial public offering could come as soon as the fourth quarter of 2010 if the automaker meets its recovery targets and the financial markets are receptive.
Bloom said the government had previously expressed concerns about GM operations but now trusts the directors and management to do what is best for shareholders.
“We're done. We're not saying what we think anymore,” Bloom said of the more passive role assumed by the administration since GM's bankruptcy.
Ensuring corporate independence at GM and Fiat-led Chrysler includes accepting decisions that may surprise the government or diverge from administration goals, such as production of electric vehicles.
Bloom said the administration was caught off guard when GM decided this month to keep its European Opel unit rather than sell a majority stake to a Russian-backed group led by Canadian auto parts maker Magna International.
The former investment banker and senior executive of the United Steelworkers union said the GM board, which the task force helped create, is as good as any globally and the decision on Opel was never challenged by the administration.
“They made their own decision and we're not going to try to get them to change it,” he said.
The Tuesday interview with Bloom was a rare on-the-record look at the administration's approach to managing the $40 billion in taxpayer exposure to GM and rival Chrysler after the government facilitated bankruptcy restructurings at both.
Bloom is now wearing two hats - as a senior adviser to President Barack Obama on manufacturing and as the leader of the task force, which was largely dismantled after the car companies emerged from Chapter 11 protection.
IPO NOT ONLY GM GOAL
Bloom said he agreed with GM Chairman Ed Whitacre's assessment that the IPO was not the only goal.
The company, he said, first should be focused on making money and paying back $6.7 billion in US debt. That process began on Monday.
“The IPO is a consequence not a cause,” Bloom said, adding that a decision on timing would rest with the US treasury secretary. The US taxpayer holds just over 60% of GM.
Bloom said the possibility of a GM IPO could be raised in June when he is next scheduled to sit down with the carmaker to reevaluate debt repayment plans.
By paying down its government debt obligations - including $1.4 billion due to Canada - GM will cut its current $17 billion in debt almost in half. Chief Executive Fritz Henderson has said the move will create room for the automaker to seek a private line of credit from banks.
On Chrysler, the government is encouraged by the turnaround plan presented by Fiat, but will not push for a quick offering of the automaker's shares, Bloom said.
“We see management with a huge sense of urgency. We see a huge dedication and commitment, working extremely hard,” Bloom said. “It's an ambitious plan.” (Reuters)