Canada Rejects GM, Chrysler Restructuring Plans

However they will provide bridge loans

Agreeing with Washington that they do not go far enough to ensure the auto sector's long-term viability, Canada's government rejected on March 30 the restructuring plans of General Motors and Chrysler.

"This morning, we heard from President (Barack) Obama that the United States has concerns about General Motors' and Chrysler's restructuring plans. We share his concerns," Canadian Industry Minister Tony Clement told a press conference. "The plans submitted by General Motors and Chrysler to the government of Canada do not go far enough to ensure the long-term viability of these companies," he said. "Therefore, we have not certified the restructuring plans," he said.

The embattled auto giants however will be granted four billion Canadian dollars (US$3.2 billion) in bridge loans while taking another crack at survival plans, said Finance Minister Jim Flaherty.

The two automakers employ nearly 20,000 Canadians in Ontario province, and have asked for aid from Ottawa and the Ontario government to weather a slump in demand for cars that has ravaged the global auto industry.

Ottawa is now giving GM 60 days and Chrysler 30 days to tweak their respective proposals, which for Chrysler could include an alliance with Italian suitor Fiat.

The plans must demonstrate the viability of the auto makers and maintain Canada's 20% share of the auto sector, Clement stressed.

The minister also underscored the possibility of both companies seeking bankruptcy protection, saying, "I concur with President Obama that we must also consider the possibility of court-supervised restructuring."

Copyright Agence France-Presse, 2009

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