General Motors Co. has suddenly found itself front and center in the news today. The company, or the government agency, posted its second consecutive quarter of positive earnings this morning for the first time since 2004. Second-quarter profit totaled $1.3 billion, or EPS of $2.55. Revenue totaled $33.2 billion. In the second quarter of 2009, GM lost almost $13 billion on its way to a bankruptcy filing. One could say that things are definitely looking up.

There is plenty of speculation that GM is preparing to file for an IPO, perhaps as early as tomorrow. And while the company’s outlook has brightened considerably, that seems a bit aggressive. To make matters more complicated, GM just announced that Ed Whitacre is stepping down as CEO effective September 1 and will stay on as Chairman through the end of the year.  Whitacre is being replaced as CEO by GM board member and Carlyle veteran Dan Akerson.

The first consideration here is whether GM pay back Uncle Sam at the IPO and after the IPO.  The second issue is whether GM can remain profitable.  Both of those issues will prevail over Ed Whitacre’s remaining days and the transition.

GM’s sales in North America totaled 716,000 units, a 9% increase over the second quarter of 2009. European sales fell 6%, and international sales, which includes China, rose to 995,000 units, up 23%. Worldwide, the company produced 2.26 million vehicles and sold 2.15 million. Capacity utilization ran at nearly 93%, an enormous boost over the less than the 40% capacity utilization in the same period a year ago. The company has also added 2,000 hourly employees in North America since last year.

Cash from operations totaled $3.85 billion, more than double the amount from the second quarter of 2009. Free cash flow totaled $2.83 billion, more than 2.5-times the year-ago amount. GM now reports cash, cash equivalents, and marketable securities valued at $31.5 billion.

Given the company’s cash-on-hand and free cash flow, it’s little wonder that GM is pushing for an IPO.  The U.S. government holds a 61% stake in GM as a result of the $50 billion the government provided the company back in the bad old days of last year. Whitacre wanted the U.S. to sell at least $10 billion worth of the company in an IPO, but U

.S. Treasury officials are afraid that a sale on that scale will dilute the value of the government’s stake.

GM wants to lose the ‘Government Motors’ moniker as quickly as possible. The company needs to convince investors that it can continue to grow revenue and profits. One way to approach that is to announce a new credit facility, worth $5 billion, that is underwritten by the largest banks in the country. And that’s just what GM has done, according to The Wall Street Journal. GM has reportedly lined up 10 banks each of which will commit $500 million to the credit facility. More banks want in on the deal, and if they are included the facility will probably remain capped at $5 billion but individual amounts would be lowered.

Clearly GM’s performance and cash position are much stronger than they were a year ago, but one has to suspect that the banks’ eagerness to contribute to this credit facility depends more on the fact that federal government controls the majority of the company. There is a strongly implied federal guarantee of repayment here, whether or not GM continues to grow.

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