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Spokane, Washington  Est. May 19, 1883

GM to boost stock price range for IPO

Investor demand has far exceeded expectations

Tom Krisher Associated Press

DETROIT – Investor demand for General Motors’ shares is so high that the automaker will raise the price range of its common stock to $32 to $33 when its initial public stock offering begins on Thursday, a person briefed on the sale said Monday night.

GM is also planning to sell 9 million more preferred shares than originally expected, the person said.

The final price will be set Wednesday after the stock markets close, but GM intends to announce the new range and the additional preferred shares this morning in a filing with the U.S. Securities and Exchange Commission, said the person, who didn’t want to be identified because the moves have not been officially announced.

Earlier this month GM said its owners, including the U.S. government, will sell 365 million common shares for $26 to $29 each. The company won’t sell common shares, but had planned to sell 60 million preferred shares for $50 each.

But since then, investor demand has been so high that GM and bankers handling the deal have decided to raise the common stock price range and issue more preferred shares, the person said. The preferred stock price will stay at $50, but GM’s total cost for those shares will remain about the same because it’s reducing the expected dividend rate from a range of 5.5 to 6 percent to between 4.75 and 5.25 percent, the person said.

The preferred shares will be converted to common stock in 2013. Bankers have the option to sell roughly 55 million more common shares, although they have not yet decided to do that, the person said.

Orders for the common shares are now seven times higher than the number of shares being offered, said the person, who expects the banks to stop taking orders for the IPO this afternoon, two days before the actual sale.

GM, just 16 months out of bankruptcy protection, has impressed analysts and investors with its third-straight quarterly profit and a prediction of much bigger earnings if U.S. auto sales continue to improve.

Any share price increase would certainly be a boon for GM’s largest stockholder, the U.S. government, which is trying to get back the $50 billion it gave GM last year to get through restructuring.

“There is legitimate demand for this,” said Scott Sweet, senior managing partner of the research firm IPO Boutique.