Ontario sells last shares of GM
Washington — The Ontario government said Wednesday it sold its final 36.7 million shares of General Motors Co. it received as part of Canada’s $10 billion government bailout of the Detroit automaker.
The Ontario Finance Ministry said it sold the shares over the last two weeks for $1.1 billion. The money will go into a trust that “will invest the funds to help build a new generation of public infrastructure that will improve the province’s long-term competitiveness and the well-being of all Ontarians.”
The revenue, including the additional $200 million generated, will be directed to “Moving Ontario Forward, a $29 billion plan to build a seamless and integrated transportation plan across the province.”
Ontario had forecast recovering $900 million for the shares in its budget.
The United States in 2008 and 2009 gave GM a $49.5 billion bailout, while Canada’s federal and Ontario governments contributed about $10 billion, including $4.8 billion from Ontario for GM and Chrysler.
Canada said “the Ontario and federal governments’ financial support to the auto sector in 2009 was crucial in protecting hundreds of thousands of jobs across the province.”
"Like any shareholder, it is their decision on when to sell their shares in our company,” said Dave Roman, director of GM Communications. “We appreciate the Ontario government’s support of the auto industry and General Motors.”
The sale comes as GM’s Oshawa Assembly plant in Ontario is at high risk for closure, analysts believe. The automaker said it will wait until next year before deciding any new vehicle commitments or investments there. The plant is slated to lose a high-volume vehicle, the Chevrolet Camaro, this year.
GM Canada President Stephen Carlisle said the company remains committed to Canada. But he said GM but must complete 2016 union contract negotiations with Unifor (the union created by the Canadian Auto Workers’ merger with the Communications, Energy and Paperworkers Union) before making a final decision about what might be built at Oshawa.
It’s one of GM’s two assembly plants in the province, along with CAMI Assembly in Ingersoll. The Oshawa plant, about 41/2 hours from Detroit, employs more than 3,000 hourly workers.
In exchange for the bailout money, GM promised to launch five new vehicles in Canada, including a Canadian-made hybrid, and to keep at least 16 percent of North American production there through 2016. A GM spokeswoman said all those mandates will be met or exceeded. Last year, the federal and Canadian governments owned 7 percent of GM’s common stock.
In a January regulatory filing, the Canada GEN Investment Corporation said it owned about 73.39 million shares of GM stock or 4.6 percent of GM’s stock. A note in the filing said that an arrangement between the Canadian government and Ontario, in which Canada had committed to provide Ontario with one-third of proceeds from the sale of any stock held by Canada GEN and a third of dividends received by Canada GEN has been terminated.
The Detroit carmaker has said one of two lines at Oshawa — the one-shift consolidated line that builds the Chevrolet Impala Limited fleet vehicle and Chevrolet Equinox — likely would end in 2016. The plant also has a three-shift “flex” line that produces the Camaro, Impala, Cadillac XTS and Buick Regal. Camaro production is scheduled to shift to GM’s Lansing Grand River Plant this year.
Canadian and Ontario government officials met with executives from GM, Ford Motor Co. and Fiat Chrysler Automobiles during the Detroit auto show in January. Union and government officials said the mood and sentiment about Ford and FCA in Canada was good; Ford and FCA recently made major investments in Ontario. Their concern centers around GM Oshawa.
“We made it very clear that we would like to see an indication on the future of Oshawa sooner, in particular because the timing is very challenging for our supply chain to be able to adjust to potentially future orders or changes, but also to know that there are going to be future opportunities at Oshawa,” said Brad Duguid, Ontario minister of economic development, employment and infrastructure.
Ontario has been friendly in recent years to automakers that invest there. It recently awarded a grant worth up to $85.7 million over five years to Honda for its $857 million investment at its Alliston plant that retains about 4,000 jobs.
Duguid said Ontario is open to discussions with GM on partnerships.