06-02-2009, 06:13 AM
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#139 (permalink)
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warrior bodhisattva
Super Moderator
Location: East-central Canada
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And a bit about Canada's role (Feds and Ontario gov't...well, Canadian taxpayers as shareholders):
Quote:
Most of GM loan won't be repaid, Harper says
Ontario Premier Dalton McGuinty, left, and Prime Minister Stephen Harper answer questions at a news conference in Toronto June 1, 2009.
Federal and Ontario governments provide $9.5-billion to auto maker in bankruptcy protection; taxpayers to hold 12 per cent of company
Karen Howlett
TORONTO — Globe and Mail Update, Monday, Jun. 01, 2009 05:46PM EDT
The federal and Ontario governments do not expect General Motors Corp. (GM-N0.75----%) to repay the bulk of the $9.5-billion (U.S.) in Canadian loans the auto maker is receiving as part of Monday's bankruptcy filing, Prime Minister Stephen Harper said.
He added that he does not see taxpayers being long-term owners of the failed car maker.
“We don't intend to run automobile companies,” Mr. Harper said at a news conference. “We are not seeking to be equity holders in the long term.”
GM will emerge from bankruptcy protection much diminished, with production in North America falling to three million vehicles a year in 2010 from a peak of 5.4 million in 2003 during its heyday.
The Canadian governments could not just stand “idly by” and do nothing, Mr. Harper said, after the former Bush administration in the United States decided late last year to rescue the auto sector.
The federal and Ontario governments have agreed to lend GM about 16 per cent of the total $59-billion rescue package.
In return, Canada will retain 16 per cent of GM's North American vehicle production until 2016, get one seat on a new 13-member board of directors and 11.7 per cent of the company's common shares.
The accord between the Canadian and U.S. governments and GM follows non-stop negotiations over the past week, and is much more complicated than an earlier agreement with Chrysler LLC.
“It's quite a different deal than the Chrysler deal,” said a senior federal government official at a technical briefing on Monday.
GM will use $4-billion of the Canadian loans to address the shortfall in its pension plans. In addition, the company will inject $200-million into the pension plans over the next five years, making them fully solvent.
Canadian taxpayers could end up owning equity in GM until 2018, depending on how long it takes the governments to sell off the shares. They plan to begin selling 5 per cent of their shares a year in 2010 and hope to have 65 per cent of their equity sold by the end of 2016.
“Without Canadian money in the game, we would be out of the game,” added Ontario Premier Dalton McGuinty. While he said the loans are “extraordinary,” he said the alternative would have dealt a “devastating blow” to Ontario families.
GM has also agreed to invest $2.2-billion in Canada over the next seven years, including introducing a new engine module at its plant in St. Catharines, Ont.
However, the deal does not include a commitment on how many employees GM will retain in Canada.
The governments will try to recoup their money by divesting shares over eight years, hoping the stock price is high enough to provide a return. The auto maker doesn't have to pay back any more than the $1.3-billion loan.
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http://www.theglobeandmail.com/repor...rticle1163443/
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Last edited by Baraka_Guru; 06-02-2009 at 06:15 AM..
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