Ottawa sells remaining stake in GM
Almost six years to the day Ottawa teamed up with the Ontario and U.S. governments to bail out General Motors Co., the federal government is selling its stake in the company.
The government announced late Monday that it will sell its remaining 73.4 million shares of GM to Goldman Sachs Group Inc. in an unregistered block trade. The sale, which would be worth approximately US$2.7 billion at Monday’s New York closing price of US$36.66, will be completed on Friday.
“With today’s announcement, we have eliminated a market exposure for Canadian taxpayers and returned GM to private-sector ownership, having supported its continued contribution to the Canadian economy,” Finance Minister Joe Oliver said in a statement. “As we said from the start, our investment in GM was always meant to be temporary.”
The selloff comes as the Conservative government searches for ways to live up to its crucial promise to balance its books in 2015-16, a longrunning pledge that appeared at risk of remaining unfulfilled amid the negative economic impacts of the global oil slump.
Even though lower crude prices are expected to indirectly carve billions of dollars out of federal coffers, the government has repeatedly insisted it will eliminate the deficit in the April 21 budget. Following through on the pledge will be central to Tory re-election fortunes in the October vote.
The sale also comes only a few days after the start of the 2015-16 fiscal year, which means proceeds will boost the budget’s bottom line.
Did the federal government postpone the budget by a couple of months in order to sell the GM shares during the 2015-16 fiscal year?
“I think the timing would suggest that that’s definitely a possibility,” TD Bank senior economist Randall Bartlett said Monday. “But whether or not they made that decision to delay the budget in order to do that is a question I think you’d have to ask Minister Oliver.”
Details of the sale will be revealed when Canada GEN Investment Corp., the entity that held the shares, reports its trade with securities regulators in the next several days.
The move follows Ontario’s sale of its remaining 37.6 million GM shares in February. The province said it would invest its $1.1 billion of proceeds in an infrastructure fund.
A UAW trust set up to pay for union retirees’ medical costs remains as GM’s biggest shareholder with an 8.7 per cent stake.
The federal and Ontario governments invested $9.5 billion in GM in 2009 as part of a massive North American bailout to help the company restructure under bankruptcy protection. In exchange, the two governments got a 12% stake in the company.