The Canadian and Ontario governments have loaned the Canadian branch of General Motors 500 million Canadian dollars (US$424 million) to stay afloat as it works on a new restructuring plan.
The interim bridge loan is the first to be tendered to General Motors of Canada Ltd. by Ottawa and the Ontario government, and is to be used only for working capital as the company restructures, they said.
"The federal government advanced this interim loan to support the orderly restructuring of a critical industry," said Industry Minister Tony Clement. "Our job is to work toward a solution that will help restore the industry's long-term viability, and maintain our proportionate share of North American production as the auto sector emerges from restructuring on its path towards long-term competitiveness."
GM is working against a June 1 deadline from the U.S .and Canadian governments to come up with a new viability plan or face the end of government credits, which would force the company into bankruptcy.
The Canadian loan will be provided through Export Development Canada under commercial terms. Ottawa will provide two-thirds of the amount, while the Ontario government will contribute one-third.
Last month, GM announced it would cut 5,900 jobs in Canada by 2014 -- nearly 60% of its workforce here -- as part of its restructuring.
The company said it also plans to reduce the number of its dealers in Canada by 42%, from 705 today to between 395 and 425 by the end of 2010.
Copyright Agence France-Presse, 2009