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  • Bailout Watch 476: Canadian Government Fronts ChryCo CA$250 Million for Payroll

31st March 2009

Bailout Watch 476: Canadian Government Fronts ChryCo CA$250 Million for Payroll

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Mega dittos from our neighbors to the north. The Globe and Mail reports that the Canadian government is also playing hard man re: GM and Chrysler’s call on federal bailout bucks. Yada, yada, yada, restructure, union concessions, new plans, bankruptcy. And then, this:

Chrysler was unable to meet its Canadian payroll today without a $250-million advance on a $1-billion bridge loan from Canadian taxpayers. To qualify for up to $4-billion in long-term aid, Chrysler has to conclude now-stalled negotiations with the CAW on a cost-savings contract and complete the Fiat deal.

To stave off an immediate crisis, the federal and Ontario governments offered the bridge loans—including up to $3-billion for GM—to allow them to continue operating while they work to satisfy U.S. and Canadian government demands.

The CA$250 million is an advance on the billion dollar bridge. And make not mistake about it: ChryCo is sucking on fumes.

The company, which employs 9,500 workers and has assembly plants in Windsor and Brampton, Ont., is teetering on the brink of failure.

“Very clearly, if the money had not been forwarded today, they would not have been able to meet payroll today or tomorrow,” Mr. Clement told a news conference.

The result would have been bankruptcy protection and, potentially, the liquidation of Chrysler’s assets in Canada.

Chrysler no doubt welcomes the contribution to their cash flow, but they won’t be glad to hear one of the strings attached to the next round of bailout bucks—should they ever get that far: they can’t use the money to pay their $500 million tax bill. That idea makes my head hurt. [Thanks to boosterseat for the link.]


Globe and Mail »

 

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