Ottawa, Ontario’s GM shares valued at $432-million after U.S. buyback

The Globe and Mail

The General Motors logo is seen outside the auto maker’s headquarters in Detroit. (Carlos Osorio/AP Photo)

General Motors Co. has agreed to buy back $3.2-billion (U.S.) worth of preferred shares owned by the United Auto Workers retiree trust in a deal that puts a value of about $432-million on similar shares held by the federal and Ontario governments.

The UAW trust holds 260 million preferred shares of GM, while the two Canadian governments hold 16 million.

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The auto maker will pay $27 a share to purchase 120 million of the preferreds from the UAW trust.

The shares pay dividends of 9 per cent annually. The buyback will be financed in part by issuing five, 10 and 30-year unsecured notes, GM said Monday. The interest rate on the notes was not disclosed, but GM said it expects to record a third-quarter charge of $800-million as a result of the deal.

The federal and Ontario governments recently sold 30 million common shares of GM for about $1.1-billion.

That sale left them with about 110.1 million common shares.

The governments received the preferred and common shares in General Motors Co. in return for contributing about $10.8-billion (Canadian) to the bailout of the auto maker and its predecessor company, General Motors Corp.