Canadian Manufacturing

General Motors stock sale: Here’s what we know

Did Canada make a profit from GM stock sale? Figures haven't been released and the government is talking

April 8, 2015  by The Canadian Press

OTTAWA—How much cash did the federal government take in by selling its remaining stake in General Motors? The final figures haven’t been released yet, but here’s what is known about the deal:

  • The government sold 73,389,831 GM shares on April 6 to Goldman, Sachs & Co. in an unregistered block trade.
  • Goldman, Sachs & Co. was selected by a two-stage, competitive process, said Finance Department spokesman David Barnabe. In the first stage, Barnabe said a group of investment banks—each with significant trading activity in GM stock and extensive experience in large-block sales—were chosen. In the second stage the banks presented their bids for all of the government’s remaining GM shares.
  • The value of taxpayers’ remaining GM stake was more than $3.3 billion on April 6, based on a US$36.66 price at the close and an exchange rate of $1.2473.
  • The government says details on the proceeds from the sale will not be available until the deal passes through U.S. and Canadian securities regulators, expected in the coming days.
  • The deal was made to “eliminate a market exposure” and “ensure a good return for Canadian taxpayers, following the advice of independent experts and consistent with best commercial practices,” Barnabe said.
  • Ottawa needed to make $4 billion in proceeds from its remaining shares just to break even on its original 2009 investment, which was part of the effort to bail out GM.
  • The Finance Department has said the value of the GM stock was initially booked at about $1.1 billion. A net gain or loss from the sale would be the total proceeds minus the book value.
  • Therefore, the government would reap a net gain of $2.2 billion if the shares were sold at the current market valuation of about $3.3 billion.
  • A sale of $3.3 billion would also leave the government $700 million short of breaking even on the original investment.