GM increased the size of its convertible preferred stock offering by $1 billion on Tuesday, strengthening the automaker’s balance sheet as the US government attempts to break even on its controversial investment.
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 on Tuesday.
The top US 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% increase at the midpoint.
Sources said on Monday, that strong investor demand had led GM to raise the IPO price and that it could offer additional preferred shares.
A higher GM share price and an increased offering size means the initial loss to US taxpayers from the bailout of General Motors will be more limited than initially thought.
The US Treasury owns nearly 61% 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 US taxpayers to break even.
The final terms for both offerings will be determined when GM prices its IPO, the company said, which is expected to be today and it will begin trading on the New York and Toronto Stock Exchanges on Thursday.