Canada says may finance auto firms in bankruptcy

Thu Apr 23, 2009 5:50pm EDT
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OTTAWA (Reuters) - Canada is considering providing debtor in possession financing to Chrysler and General Motors Corp if the companies end up having to file for bankruptcy protection, Industry Minister Tony Clement said on Thursday.

"It's pretty clear the banks are not going to be the financiers (for debtor in possession financing)," he told reporters.

"So... the suggestions to both the United States government and the Canadian government -- and the Ontario government as well -- is we would be the DIP financiers in those cases. So that is a bridge we have not crossed yet, but obviously we are looking at all the permutations."

Canada and the province of Ontario were in advanced negotiations to provide the companies with up to $6 billion to help them emerge from bankruptcy protection if need be, The Globe and Mail newspaper reported.

The talks included the U.S. Treasury and senior auto executives and would see Canada contribute about 15 percent of total funding that could reach $40 billion, the paper said.

Clement also said he was getting hourly updates on concession talks between Chrysler and the Canadian Auto Workers union and that he was pleased at the progress being made.

(Reporting by Randall Palmer, writing by John McCrank)

<p>Minister of Industry Tony Clement speaks during a news conference in the foyer of the House of Commons on Parliament Hill in Ottawa April 7, 2009. REUTERS/Blair Gable</p>