Title:
GM to Test Investors' Hunger for Risk With Stock
Offering
Description: This is
a VOA Special English Economics Report.
See text below
Text:
America's biggest carmaker accepted fifty billion
dollars in federal aid from the Obama and Bush
administrations. People joked that GM meant
"Government Motors." Now, General Motors could be on
the road to recovery. The company recorded over two
and a half billion dollars in profit in the first
half of the year. The government still owns
sixty-one percent of GM as a result of the bailout.
Canada is also a shareholder. But now GM plans to
sell stock to the public again. GM spent just forty
days in bankruptcy. It sought protection from its
creditors in June of last year. GM restructured. It
discontinued some vehicles and closed dealerships
and factories.In April, GM repaid almost seven
billion dollars in government loans. Many of its
creditors are waiting to see how much they get. GM
plans an IPO, an initial public offering of stock,
later this year. The company could raise as much as
fifteen billion dollars. Chief executive Edward
Whitacre left the company September first. He wants
the government to sell all of its shares in the
company during the IPO. Many experts believe the
Treasury will act slowly over time after the public
offering is completed. If the stock price rises, the
government could profit from the rescue. But the IPO
is risky for the company. The offering will test the
willingness of investors to take an equity share in
the "new GM."Buying equity is not like buying bonds.
Bonds represent a loan. Equity represents ownership.
Investors willing to buy equity shares in a company
expect one thing -- growth.GM believes it can make
that happen, in part with a new electric-and-gas
hybrid car. The Chevrolet Volt can go up to
sixty-four kilometers before it uses any gas at all.
The Volt is expected to start arriving in showrooms
later this year. GM is also looking overseas. The
world's fastest growing car markets are in
developing nations. GM is now selling more cars in
China than in the United States. GM still leads the
American market, although Toyota is now the biggest
car company in the world.There are signs that
America's big three carmakers may have put the worst
of their recent troubles behind them. Chrysler also
went through bankruptcy and says its sales are up.
Italy's Fiat holds a twenty percent share.Ford Motor
Company avoided bankruptcy and refused government
help. Ford reported close to five billion dollars in
profit for the first six months of the year. For VOA
Special English I'm Alex Villarreal.
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Hi. I
personally reviewed this video and found it appropriate for
the news section of English Global Group. This
is a Voice of America video which covers an interesting
topic in Special English. I would appreciate some feedback from both
students and teachers about this video. You can comment in
the window below using any of a number of different services
including Facebook, Yahoo, AOL, and Hotmail.
