Federal Finance Minister Jim Flaherty says Ottawa will contemplate whether to sell more of its General Motors shares after the U.S. government announced it would divest its own equity stake in the car maker by 2014.
“I don’t have a plan. It’s something we’re going to have to consider,” Mr. Flaherty told reporters while he was in Burlington, Ont., Wednesday.
“Discussions have taken place with the U.S. Treasury and with General Motors in Canada and General Motors U.S.”
It was just two weeks ago that the finance minister rejected the idea of selling Ottawa’s GM shares on the grounds they are trading at too low a price. The federal government and Ontario bought shares in 2009 as part of an unprecedented American-Canadian bailout of the automaker.
Mr. Flaherty, however, he said on Wednesday that he discussed the matter with GM CEO and chair Daniel Akerson that same morning.
“It is something that we will now consider further – about whether we will dispose of more of the shares that are held by the taxpayers of Canada and, if so, our timing on that disposition,” the minister said.
He reiterated that Canada still wants to get the best deal possible for its shares.
“We’ve always been clear about two things: one, that we will not have a fire sale. We will not sell the shares without getting the best value we can for Canadian taxpayers.”
At the same time, Mr. Flaherty said, the laissez-faire Harper government has no interest in staying a shareholder in GM.
“We are a Conservative government. We’re not interested in the long term in being shareholders in private corporations including publicly traded private businesses.” It was only November 30 that Mr. Flaherty said now is not the time for a “fire sale” of the more than 140 million GM shares Ottawa and Ontario currently hold as a remnant of their contribution in the 2009 bailout.
The shares – of which two-thirds belong to Ottawa and one-third to Ontario – are managed by a federal Crown corporation that reports to Mr. Flaherty.
The Canada Development Investment Corporation reported recently that the combined value of the two governments’ shares in GM stood at $3.5-billion as of Sept. 30. However, it is estimated that the shares would have to be sold at about $53 each – more than twice their current value – for the two governments to get back the $10.8-billion they contributed toward the 2009 bailout of GM.
Back in 2009, Ottawa added between $8-billion to $10-billion to its deepening deficit as a result of loans to General Motors and Chrysler. It set aside that much money – representing much of its share of the bailout – because of the likelihood it won’t recoup all of that support.