OTTAWA (Reuters) - Canada is re-extending up to C$4 billion in bridge loans to the domestic units of General Motors Corp and Chrysler LLC to keep them in operation until they present new restructuring plans, officials said on Monday.
“They will be available to ensure their continued operations in Canada while they do this additional work and will be available to the companies as soon as they are required,” a senior government official told reporters in a briefing.
The federal government and the provincial government of Ontario will close an interim financing deal with Chrysler on Monday for C$1 billion, advancing C$250 million right away. Another C$500 million will be disbursed in early April and the remainder as of May 1.
GM is eligible for up to C$3 billion and officials said the government hoped to close that deal “very soon”.
Ottawa and Ontario first announced the loans in December but neither company has drawn on them yet. The federal government is extending two-thirds of the aid with the provincial government responsible for the other third.
The three-year loan to Chrysler will bear a minimum interest rate of 5 percent and will be callable if the restructuring plans are not deemed acceptable by the government.
As added security on the loans, Chrysler is being required to provide additional interest-bearing notes equal to 6.67 percent of the total loan extended to it.
Reporting by Randall Palmer and Louise Egan; editing by Peter Galloway