Canada’s Fed Govt, Ontario, Seek to Divest Shares in General Motors

The federal government of Canada and state government of Ontario have been reported to have started the necessary steps to divest their remaining collective 10 per cent stake in General Motors Co. Both governments have started to approach investment banks that could help in their offloading plans.

Although it remained uncertain as to when the share sale will happen, the recent move confirmed Finance Minister Jim Flaherty's pronouncement in December that Canada will soon divest its shareholder controllership in the American multinational automotive corporation.

The 10 per cent stake holding of the federal and Ontario governments, at 140 million common shares, is currently valued at $5.1 billion, according to Bloomberg. Canada GEN Investment Corp. is the agency tasked to supervise the two Canadian governments' holdings.

"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, a spokeswoman for Mr Flaherty, said in a statement.

Canada's federal government owns two-thirds of the 10 per cent stake controllership, while the Ontario government owns one-third.

Investment bank Rothschild Canada Ltd. was reported to have been hired by Canada GEN Investment Corp. to advise on the GM holdings.

Shares of General Motors Co. closed at US$36.4 as of Wednesday. However, it would need to breach above US$50 if the Canadian federal and Ontario governments want to receive back all the money they invested into the company's bailout in 2009, which amounted to US$9.5 billion.