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Canada’s Clement Doesn’t See Profit From GM Stake

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Canada’s Clement Doesn’t See Profit From GM Stake (Update1)

June 03, 2010, 4:28 PM EDT

MORE FROM BUSINESSWEEK

By Hugo Miller and Alexandre Deslongchamps

June 3 (Bloomberg) -- The Canadian government doesn’t expect to profit from its investment in General Motors Co. as the automaker prepares to sell shares after emerging from bankruptcy protection, Industry Minister Tony Clement said.

“The prime minister said when we made the announcement that we weren’t expecting to make money; I don’t think that’s a necessary realistic expectation but we are seeking to maximize the value for the taxpayers,” Clement said in an interview in Bloomberg’s Toronto office today. “That’s all we can say right now because we don’t have the valuation.”

Canada and the province of Ontario agreed last June to invest $9.5 billion in GM and take a 12 percent equity stake as part of a U.S. government-led bailout of the automaker. Detroit- based GM, which emerged from bankruptcy protection in July, plans an initial public offering as early as this year.

Prime Minister Stephen Harper said last June his government is assuming “for budgetary purposes” that it won’t recover any of its investment in GM. The federal government provided two- thirds of the Canadian package and the Ontario government provided the rest.

While Clement today reiterated that the government wants to exit its investment in GM as quickly as possible, he declined to comment on the possible timing or size of the planned IPO.

Economic Recovery

In a separate Bloomberg Television interview, Clement said Canada’s automotive sector is recovering from the recession. He also said the economic recovery is still fragile after Canada posted its fastest growth in a decade during the first quarter.

The U.S. government’s current net investment in the automaker is $42.2 billion, according to a senior official in President Barack Obama’s administration. GM has repaid $6.7 billion in loans and paid $600 million in interest and dividends. The U.S. also holds $2.1 billion in the company’s preferred shares.

U.S. officials have also indicated the government expects to take a loss on its GM bailout.

“When we did this restructuring we never expected a full recovery of our investment,” Steven Rattner, the former head of President Barack Obama’s automotive task force, said May 10 in Detroit. “If it ends up costing us $10 billion we should consider it a success.”

--Editors: David Scanlan, Andrew Barden

link:

http://www.businessweek.com/news/2010-06-03/canada-s-clement-doesn-t-see-profit-from-gm-stake-update1-.html

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