GM in "constructive" talks with Canada: new CEO

Wed Apr 8, 2009 11:31pm EDT
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By John McCrank

TORONTO (Reuters) - The new chief executive of General Motors Corp said on Wednesday the automaker, which is teetering on the edge of bankruptcy, was having constructive talks with governments of Canada and the province of Ontario about future funding support.

The Canadian government echoed the U.S. auto taskforce last week in saying that GM's restructuring plans did not go far enough to make the company viable and gave it 60 days to reorganize in order to qualify for long-term government aid.

Ottawa did offer GM and Chrysler, which also had its turnaround plan rejected in both Canada and the United States, C$4 billion ($3.2 billion) in bridge financing to help them survive in the short-term.

The companies are seeking up to C$11.5 billion in total loans in Canada due to a steep downturn in global auto sales.

GM has been running off $13.4 billion in emergency U.S. government loans, and is seeking another $16.6 billion.

Fritz Henderson, who took over at GM last week after former CEO Rick Wagoner was ousted as part of conditions set by the U.S. administration, said that one of the issues in Canada concerned the company's pension plan.

"There are some questions about ... how we handle our underfunded pension situation in Canada, so we are in dialogue ... constructive dialogue and we are going to work with them to bring this matter to resolution," he told the Canadian Broadcasting Corporation.

Henderson praised the Canadian Auto Workers union for striking a cost saving deal with GM on March 11 that the company said would wipe nearly C$1 billion off its books on costs related to retirees. That comes on top of a reduction of more than C$7 an hour for each of GM's approximately 10,000 active Canadian unionized employees.   Continued...

<p>General Motors auto workers prepare rows of the new Chevrolet Camaro for delivery, at the company's Oshawa Ontario facility, April 8, 2009. REUTERS/Fred Thornhill</p>