The Canadian and Ontario governments own about 10 per cent of GM, a holdover from the auto bailouts of the recession.MIKE CASSESE/Reuters
Ottawa is asking investment bankers to make proposals on how to unload a 10 per cent stake in General Motors Co., a move that would recoup much of the money spent by the federal and Ontario governments to bail out the company in 2009.
Sources familiar with the plans suggested the timing of a sale has not been set. The U.K.'s Sky News reported Wednesday that Ottawa is looking for banks that could execute the share sale.
The federal and Ontario governments together hold nearly 141 million common shares, valued at $5.3-billion at the current stock price. Ontario's share is about one-third of that amount Ottawa's is two-thirds.
The governments received the shares after they joined the United States in an unprecedented bailout of struggling GM and Chrysler Group LLC, a move designed to help preserve Canada's share of the auto manufacturing industry. Finance Minister Jim Flaherty's office Thursday said Ottawa wants to sell the shares but in a manner, and on a schedule, that reaps the most possible for federal coffers.
"The government of Canada remains committed to exiting from ownership of GM as quickly as feasible, while maximizing the value of the government's interests for Canadian taxpayers," Kathleen Perchaluk, press secretary to Mr. Flaherty. She would not say whether a sale of shares was imminent or what the timetable for disposing of the stake might be.
GM shares closed yesterday at $36.4 (U.S.). The stock would have to rise to more than $50 before Ottawa and Ontario could get back all of the money the put toward the company's bailout.
The sale of this stake could help the federal government's efforts to eliminate a persistent budget deficit. The Harper government is trying to return Ottawa to a surplus position by 2015.
Ms. Perchaluk said the Canada GEN Investment Corporation, which holds Canada's GM shares, "examines on an ongoing basis, opportunities to divest those shares."
The Canadian Development Investment Corporation, which holds the Canada GEN Investment Corporation, said in a December 2012 report on its corporate plans that it has hired Rothschild Inc. as an advisor to manage the GM investment.
Ottawa and Ontario's $13.7-billion (Canadian) move to protect Canada's auto sector in 2009 included a $10.8-billion contribution to a bailout of General Motors and $2.9-billion contribution toward a bailout of Chrysler. Some of the money has already been repaid.
The action by the Harper and McGuinty governments is widely deemed a success because it helped avoid major job losses and the disappearance of Canada's auto sector in that it prevented Detroit auto makers from retrenching to the United States.
It's not known which investment bankers Canada has asked to make pitches.
In June, the U.S. Treasury Department announced plans to sell 30 million shares of General Motors Co common stock as part of its effort to wind down the American government's stake in the auto maker.
Citigroup Inc, JPMorgan Chase & Co and Morgan Stanley are all helping shepherd the U.S government's GM share sale.
Last December, Mr. Flaherty announced that Ottawa would contemplate whether to sell more of its GM shares after the U.S. government announced it would divest its own equity stake in the car maker by 2014. Only two weeks before that, he had rejected the idea of selling Ottawa's GM shares on the grounds they were trading at too low a price.
General Motors upset the Canadian government last December when it announced it was shifting production of the Chevrolet Camaro to a plant in Michigan from Oshawa, Ont.
Steven Chase