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Workers on the line at the GM Canada assembly plant in Oshawa, Ont. (Darren Calabrese/THE CANADIAN PRESS)
Workers on the line at the GM Canada assembly plant in Oshawa, Ont. (Darren Calabrese/THE CANADIAN PRESS)

Flaherty expects GM to list shares on TSX Add to ...

General Motors Co. is poised for another comeback - this time, on the Toronto Stock Exchange.

Federal Finance Minister Jim Flaherty said Friday he expects GM to list its shares in Canada when the rebounding auto maker moves to escape Canadian and U.S. government control with a stock sale expected to be worth as much as $16-billion (U.S.).

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"This is a reasonable expectation on behalf of the people of Canada since we are a major shareholder in the company," Mr. Flaherty told reporters in Whitby, Ont. "It seems reasonable to me and appropriate that there be a listing on the Toronto Stock Exchange."

GM Canada spokesman Jason Easton said the company isn't commenting "on the locations of the listings."

GM's shares had traded on the TSX for decades, but interest was minimal. In 2004, for instance, GM traded fewer than 800,000 shares in Canada - far less than 1 per cent of the stock traded on the New York Stock Exchange. The next year, the company abandoned its Canadian listing to save costs and avoid redundant regulatory requirements.

Mr. Flaherty would not say how much of its stake, or even if, Ottawa would sell. Last year, the federal and Ontario governments pumped $10.5-billion into the then-faltering company as part of a $50-billion-plus Canada-U.S. bailout. In return, Ottawa and Ontario got a combined 11.7 per cent equity stake in GM. The U.S. government owns another 60 per cent.

"There's more information to come on the IPO in the coming weeks and we'll be having further communications with the company and then the government will make a decision," Mr. Flaherty said.

But the expectation is that the governments will likely exit in several stages, to give the company financial stability and to recoup as much taxpayer money as possible.

Mr. Flaherty said GM's quick return to profitability in the year after its bankruptcy protection filing vindicates Ottawa's decision to bail out GM.

"The profit numbers that were posted [Thursday]are a clear indication that the right decision was made on behalf of Canadians to preserve Canada's place in the auto industry," Mr. Flaherty said. "This is a tremendous turnaround for this company."

In the months since its quick journey through bankruptcy court, GM has slashed as much as $6,000 off the average cost of producing each of its vehicles, giving the auto maker a rare cost advantage over key rivals.

This week, the downsized automaker surprised analysts by reporting a $1.33-billion second quarter profit on the strength of surging vehicle sales, up from $865-million in the first three months of the year. GM lost $88-billion in the five years before it filed for bankruptcy protection last June, and those losses continued through the latter half of last year.

If the turnaround continues, the government's stake in the company could be worth a lot more several months from now.

Also this week, GM announced that Dan Akerson, a 61-year-old who orchestrated a string of turnarounds in the U.S. telecom industry, would succeed Ed Whitacre, 68, as chief executive officer on Sept. 1.

GM is expected to file a prospectus with the U.S. Securities and Exchange Commission as early as next week for the initial public offering. Reuters reported that the lead underwriters will be JPMorgan Chase & Co. and Morgan Stanley.

Follow on Twitter: @barriemckenna

 

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