World Economy

Canada Sells GM Stake Worth $2.7b

Canada Sells GM Stake Worth $2.7bCanada Sells GM Stake Worth $2.7b

Canada’s government is selling its final stake in General Motors Co., worth about $2.7 billion, as Prime Minister Stephen Harper seeks new funding to meet pre-election promises amid an oil rout.

Canada has agreed to sell its 73.4 million shares to Goldman Sachs & Co. in an unregistered block trade, the finance department said in a statement Monday. The transaction will be complete by April 10, Bloomberg reported.

The proceeds will help Harper stick to his promise of balancing the budget this fiscal year even as he delivers tax cuts and transfer payments ahead of a general election in October. Falling oil prices means annual revenue will be on average C$7.6 billion ($6.1 billion) less than forecast by the government in November, according to the parliamentary budget office.

At Monday’s closing price of $36.66, those shares would be worth about $2.69 billion. The finance department didn’t say how much it will raise from the transaction or how the proceeds will be budgeted. Details 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 government said in the statement.

  More Leeway

“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,” said Oliver, who had delayed the release of his fiscal plan until this month in order to gauge the impact of falling oil prices.

The sale comes two months after Ontario sold its remaining 36.7 million shares of General Motors for about $34 a share. That sale resulted 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, the provincial government said at the time.

Extra revenue of more than C$2 billion would give the federal government more leeway to fund new measures as it prepares to release its pre-election budget on April 21.

Harper announced C$27 billion in additional tax cuts and transfer payments over six years in October. That included a controversial measure that will allow couples with children to divide their income for tax purposes. Harper has said those cuts won’t be financed by deficits – effectively borrowing – a practice he pledged to end this year.

  Protecting Jobs

Canada and Ontario had joined with the US government in financing GM’s restructuring. Ontario sold its final GM shares in February as the US did in a little more than a year earlier. A United Auto Workers trust set up to pay for union retirees’ medical costs remains as GM’s biggest shareholder with about an 8.7 percent stake.

The number of GM employees in Canada has fallen to about 9,000 today from about 12,000 at the end of 2008, Adria MacKenzie, a GM spokeswoman, said in February. The current job total is “consistent” with estimates given to the Canadian and Ontario Governments in 2009, she said.