By Clare Baldwin and Bernie Woodall

NEW YORK/DETROIT, (Reuters) - U.S. taxpayers were
already mad about getting stuck with a $50 billion tab for
bailing out a poorly managed General Motors.

Now, the Obama administration will try to convince a
skeptical public that a sale from a better-run GM is
in their best interests.

GM turned a profit in the first quarter and Chief Executive
Officer Ed Whitacre said next week's second quarter results
will be "impressive". But investors will have to believe that a
company that lost $88 billion from 2005 through the first
quarter of 2009 and wiped out equity investors when it declared
bankruptcy last spring is worthy of another bet.

Whitacre said on Thursday that GM is preparing its IPO
filing. GM will be pushing its IPO while car sales are still
well below pre-crisis levels and a full recovery of the U.S.
auto industry is still questionable.

"If the market looks at GM as a company that is on the
brink of failure, nobody really wants to get between them and
that brink," said Rob Enderle, principal analyst at the Enderle
Group in Santa Clara, California.

The date for GM to file its IPO registration, originally
expected for mid-August, has been delayed and both the Obama
administration and the U.S. automaker's top boss have gone on
the defensive, acknowledging that there are concerns about the
IPO but offering few specific reassurances.

As GM readies the thick sheaf of papers it needs for the
nearly $20 billion offering, hoping to shed its "Government
Motors" label, the level of concern is increasing.

"With the government's involvement and the extremely
unusual bankruptcy that it went through, there are a number of
stakeholders who have very conflicting interests," said Linda
Killian, a portfolio manager at Connecticut-based Renaissance
Capital.

"They need to be very clear about what the plans are for
the company and who is going to be making the decisions,"
Killian said.

There is uncertainty over whether investors will chance a
company that lost tens of billions of dollars for previous
shareholders' savings and pensions, and, more fundamentally,
whether consumers will buy and whether GM can sell shares.

But the biggest questions right now are how shares will be
sold and how transparent that process will be.

"We have not yet determined what the exact (deal) structure
will be. That will be certainly something we and the company
discuss extensively in the period ahead. We are aware of those
concerns that have been raised and we're certain that this IPO
... will be done in a fair way," Ron Bloom, Obama's point man
for auto industry restructuring said in an interview with
Reuters Insider on Thursday afternoon.

DEAL STRUCTURE

To sell shares in an IPO companies typically rely on banks
to set a price range and market the shares to investors. It's a
subjective process and bankers try to set a price that is low
enough to allow for a 10 to 15 percent share gain on the first
day of trading but isn't so low that the company that sold the
shares could have gotten significantly more money.

The so-called "book building" IPO process in the past has
been criticized for sweetheart deals in which IPO shares are
underpriced and allocated to favored investors. While the GM
IPO has massive government involvement and will be closely
watched, some are looking for assurances that taxpayers will
get top returns and that all investors will get a chance to buy
in.

"Seventy-five percent of the time it's not going to make
much difference. But 25 percent of the time using bookbuilding
will be a mistake relative to getting a better outcome ... by
better outcome I'm talking about a better outcome for selling
taxpayers as well as fairness in the allocation," said
University of Florida finance professor Jay Ritter. Ritter
helped advise Google Inc on its auction.

A Dutch auction-style IPO can ultimately funnel more money
to a company and is sometimes perceived as more fair since
shares are sold based on bid price rather than allocated by
banks. Institutional investors and retail investors participate
in the same auction and have the same opportunity to purchase
shares.
(Reporting by Clare Baldwin and Bernie Woodall; editing by
Bernard Orr)