UPDATE: Canada: GM, Chrysler Units Must Submit New Plans
31 3월 2009 - 2:26AM
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.
At a news conference, Tony Clement, Canada's minister of
industry, said the government faced a "stark" choice - forward
loans committed to GM and Chrysler back in December or risk that
payrolls wouldn't be met. Clement said "now was the time" to
announce the loans even though the government is disappointed with
progress on their restructuring plans.
He added that he wants Canadians to know that the auto companies
are getting a little more time to come up with viable plans because
that's better than the alternative of a "disorderly" bankruptcy
that could have happened "in a number of days."
Clement said that the last few months have made it apparent that
the downturn in the auto sector isn't just a "blip," and that a
fundamental restructuring must take place. He said the companies
won't be the same at the end of the process - production will be
smaller, jobs will be lost - but they'll be in an excellent
position to "tackle 21st century car needs" of consumers.
He also referenced U.S. President Obama, who said all parts of
the auto sector have to share more pain in the short run. Clement
said he expects the Canadian Auto Workers union to continue
negotiations with Chrysler, particularly on the issue of pension
"legacy" costs, an area in which the government hasn't seen enough
progress.
-Nirmala Menon, Dow Jones Newswires; 613-237-0668;
nirmala.menon@dowjones.com
(Andy Georgiades contributed to this article.)
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