Taxpayers likely to face initial loss on GM IPO-sources

[The Northerner]

* Treasury to sell first shares below break-even-sources

* 61 pct Treasury sale could take several years-sources

* Taxpayer break-even is around $70 bln GM market value (Adds details on government stake, GM Q2 results, pension shortfall)

NEW YORK/DETROIT, Sept 3 (Reuters) - The U.S. government is likely to take a loss on General Motors Co in the first offering of the automaker's stock, six people familiar with preparations for the landmark IPO said.

Subsequent offerings of the government's holdings may be profitable depending on how investors trade the newly listed stock, the sources said.

But the question of whether taxpayers are ultimately made whole on GM's $50 billion bailout could be left open for years, the people said.

It could take more than three years for the Treasury to sell down its remaining stake in GM after the IPO, one person said. That would push a final accounting into the next presidential term.

A decision to price the initial GM shares below the cost to taxpayers would follow the usual Wall Street practice of giving the first investors in a new stock a discount, but it could also help allay investor concern in the face of the slow recovery of the U.S. economy and flat auto sales.

Preparations for GM's IP0 remain confidential. Both GM and the U.S. Treasury have declined to comment, citing restrictions by U.S. securities regulators.

Read more: http://uk.reuters.com/article/idUKN0315109920100903