Nov. 3, 2010 online at www.uawlocal2250.com
From Chairman Mike Bullock: There was over $2500 dollars collected in the raffle towards providing a Thanksgiving dinner package for our laid off brothers and sisters. The laid off members need to call the Union Hall at 636-327-5796 by November 5 to reserve their dinner package. So far only 30 members have contacted the hall. If you know of any brothers and sisters laid off, please contact them and remind them of the need to call the hall by November 5.
Distribution of the Suggestion gifts continues tomorrow for trim, paint, material, and maintenance. Times are from 8 am until 4 pm. You need your badge to pick up your gift at the old UAW/GM store next to the eyeglass store. Anyone who is not able to pick up their gift during this time can stop by suggestions.
From the Chaplaincy Committee: There will be a memorial service for Jeff Chunn Thursday, Nov. 4 at lunchtime in the tour holding room.
October sales numbers are beginning to come out. A quick look at GM van sales shows 6286 for the month, up 27.8% over last October. More details to come tomorrow.
From Reuters: General Motors will look to sell just over $10 billion worth of common stock and $3 billion of preferred stock in an initial public offering that would shift the U.S. government to a minority shareholder in the top U.S. automaker, people familiar with the matter told Reuters on Monday. GM expects to sell 365 million common shares for $26 to $29 each and will file the terms in an updated prospectus with the U.S. Securities and Exchange Commission today, the sources said.
Former Wall Street analyst Maryann Keller, now a consultant, outlined the typical initial public offering pricing process (from the Detroit Free Press – on back)
Investment bankers determine the value of GM based on an examination of GM and comparisons with similar companies. The bankers then figure out how much to discount the IPO so investors will be more interested in the stock, which is usually unproven. Typical IPO target prices are often 10% to 15% lower than the company's value would suggest, Keller said.
• Bankers then determine the number of shares to be sold and the range of the share price. In GM's case, underwriters plan to split GM's share price three ways to get a lower, more palatable price. GM's 500 million shares were split into 1.5 billion. Their price range of $78 to $87 was also split, creating the target range of $26 to $29 that GM will announce today, a person familiar with the plans says. GM will sell 365 million total shares, after the split.
• Executives embark on a "road show," giving face-to-face presentations to major investors to promote the stock and explain how the management plans to address major shortfalls. GM's road show will likely address its money-losing European region, pension-funding shortfall, product-development plans and executive turnover, sources have said. Investors are also concerned about the need for the U.S. government to hold subsequent stock offerings to exit ownership of GM, which could hold down the price of the stock, the sources said.
• Throughout the road show, investors start putting in orders for stock. Each investor offers a price for a specific amount of stock. For instance, one investor may offer to buy 30,000 shares at $29 a piece, but 60,000 shares at $26. Investors may also ask for more shares than they think GM will be able to allot them.
"They may ask for 100,000 if they think they'll only get 30,000," Keller said.
• In a typical IPO, the last orders are due the afternoon of the day before the stock hits the markets. Since GM has tentatively scheduled a Nov. 18 offering, orders could be due in the afternoon of Nov. 17. Underwriters weigh the number of shares requested at each price and how long each investor is likely to hold onto the stock. They use that data to choose the final IPO price, which could be higher or lower than the targeted range.
Final pricing is usually announced at the end of the day before the IPO. Underwriters tell investors how many shares they'll receive, and the stock starts trading the next morning.
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