GM to file mid-August IPO: sources

NEW YORK/FRANKFURT (Reuters) - General Motors Co plans to file its initial public offering in mid-August, sources familiar with the situation said on Friday.

General Motors is also in talks with banks for a revolving credit line worth $5 billion, sources said. Bank of America Corp , Citigroup Inc , JPMorgan Chase & Co and Morgan Stanley have already agreed to provide $500 million of credit each, with other banks still to be chosen, a source said.

The credit line is expected to be finalized in the next two weeks, about a month before the automaker files for its IPO, a source said. Earlier media reports said the IPO filing was expected in early July.

GM spokeswoman Noreen Pratscher declined to comment.

GM is more likely to cut the valuation on the IPO than delay it, said one source, who requested anonymity because the talks are confidential.

The U.S. Treasury, which owns nearly 61 percent of the automaker's common shares after a $50 billion bailout, plans to sell $10 billion to $12 billion in shares, sources said.

But a Treasury official said: "It is way too early to know. The pricing and ultimate size of Treasury's stake are decisions for later in the year."

GM, which declared bankruptcy last year, has emerged from Chapter 11 protection, and an IPO is a key step for the automaker to wean itself away from government support.

GM is not expected to sell shares immediately, but plans to sell about $3 billion in mandatory convertible notes that convert into shares in the future, a source said. Proceeds from the IPO are expected to be used to repay debt and fund GM's pension liability, the source said.

GM had a $27 billion pension funding shortfall at the end of the first quarter, according to regulatory filings.

GM, which was down to its last dollars before the U.S. government's bailout and bankruptcy financing, ended the first quarter with $35.7 billion in cash and marketable securities.

It had $14.2 billion of debt at the end of March.

Even if only Treasury and GM participate in the IPO, the $15 billion offering would be one of the largest of all time.

The governments of Canada and Ontario also own 11.7 percent of the company, the United Auto Workers healthcare trust has 17.5 percent and old GM, now known as Motors Liquidation, holds 10 percent.

The IPO would be an important political win for the Obama administration, which engineered bailouts for both GM and its smaller rival Chrysler in 2009 in the face of Republican criticism and public opposition.

A new credit line would provide GM with an additional liquidity cushion in the event of a possible double-dip recession and also bankroll GM's expansion in global markets including China, a source told Reuters.

The full underwriting syndicate has not been decided but JPMorgan and Morgan Stanley are the lead underwriters on the deal. Lazard Ltd and Boston Consulting Group are advising the U.S. Treasury on the GM IPO.

(Reporting by Clare Baldwin in New York, Philipp Halstrick in Frankfurt and Soyoung Kim in Detroit; Additional reporting by Mark Felsenthal and John Crawley in Washington; Editing by Gary Hill)