Canada unveils $4 bn interim loan to GM, Chrysler

March 31st, 2009 - 1:44 pm ICT by IANS  

Toronto, March 31 (IANS) Canada Monday announced $4 billion in interim loans to General Motors (GM) and Chrysler as the struggling auto giants undertake government-supervised restructuring plans.
Unlike the Obama administration in the US, the Canadian government has, however, stopped short of asking for top-level executive changes.

But Industry Minister Tony Clement said that the structuring plans by GM and Chrysler were not sufficient to ensure their viability, warning that the government will pull the plug if the auto giants didn’t do more to make their plans viable.

Under the bail-out deal, Chrysler will get $1 billion as it negotiates a tie-up with Italy’s Fiat SpA to survive.

Announcing that Chrysler was being given $250 million Monday itself to meet its immediate payment obligations, the industry minister said: “Very clearly if the money had not been forwarded today, they (Chrysler) would not been able to meet payroll today or tomorrow.

“We were faced with this choice of a disorderly bankruptcy where if liquidation would have been the result, whole plants or parts of plants could have been ripped up from Canadian soil and transferred to another country, India or China, who knows, and obviously the jobs would have gone with them.”

On the other hand, GM will receive $3 billion over a 60-day period during which it will have to redraw its restructuring plan.

Canadian plants of GM, Ford and Chrysler account for 20 percent of their overall production.

While Ford has not sought any bail-out, GM had demanded $6 billion and Chrysler $3 billion from the Canadian government to survive.

The government insists that the two auto giants should limit executive pay cheques and bonuses and allow it full access to their records during the bail-out period.

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