Ministers Clement and Bryant Announce Interim Loan to General Motors of Canada Limited

OTTAWA - The Honourable Tony Clement, Minister of Industry, and the Honourable Michael Bryant, Ontario Minister of Economic Development, on May 4, 2009 announced that the governments of Canada and Ontario have provided $500 million to General Motors of Canada Limited (GMCL) as part of an interim loan announced on December 20, 2008.

The government of Canada and Ontario have approved an interim bridge loan to be used only for working capital as needed while the company further develops its restructuring plan to meet their June 1 deadline.

"The federal government advanced this interim loan to support the orderly restructuring of a critical industry," said Minister 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."

The interim loan to GMCL will be provided through Export Development Canada under commercial terms. The federal government will provide two-thirds of the loan, while the Ontario government will contribute one-third.

"The Ontario government provided this support so that the company can do what is necessary to achieve viability," said Minister Bryant. "This will help to anchor auto production and jobs in Ontario."

On March 30, and in conjunction with the U.S. government, the governments of Canada and Ontario announced that the long-term restructuring plan submitted by GMCL was not sufficient for the governments to certify. At that time, the governments also requested the company undertake additional work to ensure its future competitiveness. This additional work will be supported by the aforementioned interim loan.

This support is in addition to the recently announced Canadian Warranty Commitment Program, under which the federal government committed to backstopping consumer warranties on new vehicles purchased from GMCL and Chrysler Canada Inc. for a limited period while improved restructuring plans are put in place. It also supplements measures announced in Canada's Economic Action Plan for the Canadian Secured Credit Facility to support consumer demand, the Community Adjustment Fund to support distressed communities, and additional funds provided to Export Development Canada to expand its program of accounts receivable insurance for auto parts suppliers.

The auto industry directly employs over 150 000 Canadians, plus another 340 000 indirectly. It is our largest industry within the manufacturing sector and represents 14 percent of our manufacturing output and 23 percent of manufactured exports.