Canada offers $4B auto lifeline

The Canadian and Ontario governments will give General Motors of Canada and Chrysler Canada up to $4 billion in interim loans, which officials say is enough money to get the troubled automakers through restructuring.

"We've come to, or very close to, the fork in the road," federal Industry Minister Tony Clement said at a news conference, adding the current restructuring plans "do not go far enough to ensure long-term viability of the companies".

There will be no further help from the governments if the restructuring plans are not certified, a senior official with Industry Canada told reporters earlier.

In a deal to be finalized today, Chrysler will receive up to $1 billion over the next 30 days, conditional on the completion of an alliance with Italian car manufacturer Fiat. Chrysler needs an alliance with Fiat to achieve economies of scale because right now it is not big enough to compete in the North American marketplace.

The governments are ready to loan up to $3 billion to GM with a deadline of 60 days for their restructuring plans but the agreement has not yet been finalized.

[Source: Wheels.ca]