Ahead of the Canadian Annual Budget release, the government has decided to sell about $2.7 billion worth of share of General Motors Co.
The shares being sold is the last remaining of the stakes taken up by the government to bail the company out following the global recession in 2009. Now the country’s prime minister is seeking new funding to meet his pre-election promises and is looking at releasing itself of the stakes. Around 73.4 million shares will be passed over to Goldman Sachs & Co. in an unregistered block trade, according to a statement by the finance department of Canada. The transaction will close by April 10.
The money thus raised is intended to balance the budget this year even as the government is struggling to deliver tax cuts and transfer payments ahead of a general election in October. The falling oil prices has put the annual revenue of the government at an average C$7.6 billion ($6.1 billion) less than forecast by the government in November.
Canada’s Minister of Finance Joe Oliver has noted in a mailed statement to Bloomberg, “Our investment in GM was always meant to be temporary. We never believed the government should be a shareholder of a private-sector company for an indefinite period of time.” The minister further noted that this move would reduce the market exposure of the Canadian taxpayers and return GM to private-sector ownership.
This sale comes merely two months after Canada sold around 36.7 million shares of General Motors for about $34 a share. That sale brought in C$1.55 billion in gross proceeds and generated a profit of C$1.1 billion after taking into account the book value of the shares.
Canada joined with the US government in financing GM’s restructuring and has proceeded to sell the stakes in the way US did about a year ago. The United Auto Workers trust set up to pay for union retirees’ medical costs is now GM’s biggest shareholder with about an 8.7 percent stake. The country invested when GM filed for bankruptcy protection, taking an equity stake of about 12 percent to protect local jobs as the US offered its own aid. There are around 9000 employees of GM in Canada now.
The shares being sold is the last remaining of the stakes taken up by the government to bail the company out following the global recession in 2009. Now the country’s prime minister is seeking new funding to meet his pre-election promises and is looking at releasing itself of the stakes. Around 73.4 million shares will be passed over to Goldman Sachs & Co. in an unregistered block trade, according to a statement by the finance department of Canada. The transaction will close by April 10.
The money thus raised is intended to balance the budget this year even as the government is struggling to deliver tax cuts and transfer payments ahead of a general election in October. The falling oil prices has put the annual revenue of the government at an average C$7.6 billion ($6.1 billion) less than forecast by the government in November.
Canada’s Minister of Finance Joe Oliver has noted in a mailed statement to Bloomberg, “Our investment in GM was always meant to be temporary. We never believed the government should be a shareholder of a private-sector company for an indefinite period of time.” The minister further noted that this move would reduce the market exposure of the Canadian taxpayers and return GM to private-sector ownership.
This sale comes merely two months after Canada sold around 36.7 million shares of General Motors for about $34 a share. That sale brought in C$1.55 billion in gross proceeds and generated a profit of C$1.1 billion after taking into account the book value of the shares.
Canada joined with the US government in financing GM’s restructuring and has proceeded to sell the stakes in the way US did about a year ago. The United Auto Workers trust set up to pay for union retirees’ medical costs is now GM’s biggest shareholder with about an 8.7 percent stake. The country invested when GM filed for bankruptcy protection, taking an equity stake of about 12 percent to protect local jobs as the US offered its own aid. There are around 9000 employees of GM in Canada now.