General Motors released its second quarter financial results today, revealing that it posted a $1.3 billion net profit, which will help the company build investor interest in advance of its initial public offering.
It's no secret that GM's been planning an IPO ever since the U.S. government took a majority share of the automaker after it exited bankruptcy last year. GM plans to file for an IPO tomorrow, inside sources told Automotive News, which might be the largest-ever IPO filed in the U.S.
In order to file for the IPO, GM needed to develop its credit facility, and secure another $5 billion in revolving credit. Sources for GM's revolving credit reportedly include Bank of America, Citigroup, Goldman Sachs Group, JPMorgan & Chase, and Morgan Stanley; a source reports that each has committed $500 million.
GM's IPO registration comes one day after it released its second quarter financial results, posting its second consecutive quarterly profit. In total GM earned $1.3 billion in the second quarter of 2010 and $2.2 billion over the first half of 2010 -- significant improvements over losses of $12.9 billion and $18.9 billion, respectively, in 2009.
"I am pleased with our progress on achieving our business objectives," said GM vice chairman and chief financial officer Chris Liddell. "We have delivered strong product, maintained cost discipline, progressed strategic initiatives such as restructuring Europe and acquiring AmeriCredit, and delivered two consecutive quarters of profitability and positive cash flow."
GM North America posted the strongest results of GM's three operating segments with an operating profit of $1.6 billion. GM International Operations followed with an operating profit of $672 million, while GM Europe posted a $160 million operating loss.
The second quarter financial results show that GM has become stronger since exiting bankruptcy, which will hopefully drive interest before the company goes public again. The IPO itself is rumored for early November, at which point GM may initially offer some $10 billion in equity. Depending on market conditions and investor interest, GM expects to reduce the U.S. government's holdings from 61 percent to a minority shareholder. By the end of the year, GM expects to have completely eliminated government holdings, and has already paid back $7 billion in government loans.
Source: GM, Automotive News (Subscription required)