OTTAWA (Reuters) - Ottawa has agreed to a request by the Canadian arms of General Motors Corp and Chrysler LLC to defer their first emergency loans until mid-January, a government official said on Friday.
“We have agreed to this request,” said Pierre-Luc Poisson, a spokesman at Industry Canada.
The government unveiled a plan on December 20 to provide up to C$4 billion ($3.4 billion) in emergency loans to the ailing automakers. The first payment to the two companies, for a total of C$1.2 billion, was originally scheduled for December 29.
Of that total, C$800 million was due to GM and C$400 million to Chrysler, which is owned by Cerberus Capital Management.
In total, Ottawa promised up to C$3 billion to GM and C$1 billion to Chrysler.
Canada took the step a day after the White House promised $17.4 billion package to shore up Detroit’s auto industry.
Poisson said the government continued to negotiate the terms and conditions of the loans and would exercise “rigorous oversight” over the use of public money.
“For example, there will be conditions on executive compensation; cooperation on due diligence, including a requirement to submit weekly reports on cash positions; and reasonable payment of parts suppliers,” he said.
The government would not comment on the reason for the request for a deferral of the loan disbursements.
Reporting by Randall Palmer, writing by Louise Egan; editing by Peter Galloway