Ottawa to report $1.8-billion gain on GM stake sale

Harper government’s sell-off was an opportunistic move to balance budget, critics say

Ottawa will report a roughly $1.8billion gain on the sale of its shares in General Motors, according to Finance Canada figures.

The Canadian government unloaded its remaining stake in General Motors on Monday for about $3.26 billion, according to a filing with the U.S. securities regulator.

After taking into account the price Ottawa booked for the shares back in 2010, the net proceeds will be about $1.8 billion, according to calculations based on Finance Canada documents.

The final figure will be contained in budget documents, on April 21.

The share sale has been criticized as an opportunistic move by the Harper government to meet its long-standing commitment to deliver a balanced budget in this election year.

Combined with earlier share sales and repaid loans, along with interest and dividend payments, Ottawa has recouped $6.4 billion of its original $7.2 billion in the automaker, according to Finance Canada figures.

That means, overall, Canadian taxpayers lost $800 million in the federal government’s multi-billion-dollar investment in General Motors throughout the 2009 auto industry crisis.

Prime Minister Stephen Harper said at the time the government did not expect to profit from the investment, saying the move was more about saving jobs and reducing the impact of the 2008 financial crisis on the broader economy.

This week’s deal marks the end of government ownership in the automaker, which had been teetering on the edge of bankruptcy following the financial crisis of 2008.

In 2009, the federal and Ontario governments invested roughly $10.8 billion in GM, both in the U.S. parent company and the Canadian operations, according to Finance Canada documents.

Ottawa contributed roughly twothirds of that amount.

As of the end of December 2014, the two governments had recovered $4.7 billion in loan repayments and share sales over the previous six years, of which Ottawa’s portion was $3.2 billion, the documents show.

Ottawa sold nearly 73.4 million GM shares on Monday for about $35.61 (U.S.) per share, a document posted on the U.S. Securities and Exchange Commission web site reveals.

That works out to about $2.6 billion, or roughly $3.26 billion Canadian at Monday’s exchange rate. GM shares closed Monday at $36.66 (U.S.).

Ottawa recorded the cost of its GM shares on its books in 2010 as $15.31 each.

The shares were sold in an unregistered block to Goldman Sachs & Co.

The federal and Ontario governments also invested in Chrysler. Those loans and shares, which originally cost $2.9 billion, were repaid earlier.