Canadian Governments Hoping For GM Buyback Of Shares
Shares of General Motors held by the Canadian federal government and the government of Ontario may have difficulty unloading their $9 billion stake in General Motors, according to a report by Bloomberg.
The chief concern is that a sudden sale of GM stock in mass quantities would be a tough sell; expectations of “flat performance” and the sudden liquidation of the shares have sparked fears that demand would be weak.
Canada GEN Investment Corp, the entity responsible for overseeing the government stake in GM, is apparently hoping to sell the shares directly to GM itself. Matthew Stover of Guggenheim Securities LLC told Bloomberg
“They’ve got a ton of cash on their balance sheet, so I would personally imagine the company to be a big buyer of the stock.”
Unfortunately, most of the documents pertaining to the stock sale were censored, which makes it difficult to glean any further information or context. But Canada GEN seems to be betting big on GM’s willingness to buy back their stock.
More by Derek Kreindler
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Harper did what Red Tories always do: pander, spend, and fold. Then they drive on, leaving ordinary Canadians holding the bag.
There is really nothing surprising in any of this. A large shareholder who wants to sell all or part of their holdings would often negotiate with the underlying company directly if that company has the cash to buy the shares and is willing to do so.
Countries everywhere saw the logic of bailing out "their" auto industry. Does Canada really have to be different just for the sake of being different?
Regardless of 'who called who' it would have been political suicide for PM Harper NOT to help out the auto sector. A large part of his support is in Ontario, which is Canada's manufacturing center, and his refusal to help out one of his biggest bases would have ensured his quick fall into obscurity. Mr. Harper is not that stupid! As Canada's biggest trading partner, the U.S. certainly has an influence on major policy decisions, but to suggest that Canada is in lockstep with American wishes, is both cynical and somewhat naive.