Canada Says GM, Chrysler Units Must Submit New Plans
March 30 2009 - 12:36PM
Dow Jones News
The Canadian government said Monday restructuring plans
submitted by the Canadian units of Chrysler LLC (C.XX) and General
Motors Corp. (GM) don't go far enough, and gave the companies
another 30 and 60 days, respectively, to put forward new proposals,
the same as the U.S. government.
Chrysler Canada has to submit new plans by the end of April, and
GM Canada (GMC.YY) by the end of May. The government said the
companies aren't viable based on the plans they have already
submitted, and suggested that the underlying sales assumptions they
used are too optimistic.
GM Canada has asked for C$6.5-C$7.5 billion in aid from the
Canadian government, in proportion to the company's 20% share of
total production in the U.S. and Canada. Chrysler Canada has asked
for C$4 billion, in proportion to its 25% share of production in
North America.
The Canadian and Ontario governments in December promised the
companies a total of C$4 billion of interim loans to tide them over
while they work out restructuring plans.
The first C$250 million of a C$1 billion loan to Chrysler Canada
will flow Monday. Another C$500 million will flow in early April
and the final C$250 million May 1.
The government is still working out details of a C$3 billion
loan to GM Canada and hopes to finalize it soon.
The loans are callable if the companies' restructuring plans
don't meet with government approval.
The government said Chrysler can't survive as a standalone
company and needs to strike a workable alliance with Italy's Fiat
(F.MI), which is key to securing more aid.
The government won't seek changes to the executive lineup at the
Canadian companies. The U.S. Administration ousted GM Chief
Executive Rick Wagoner over the weekend.
-Nirmala Menon, Dow Jones Newswires; 613-237-0668;
nirmala.menon@dowjones.com
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