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Canada, U.S. offering more than $10B as Chrysler to file for Chapter 11
U.S. President Barack Obama said Thursday the governments of Canada and the United States will offer $10.5 billion US support to Chrysler LLC, which will file for bankruptcy protection in New York state later in the day.
The U.S. government is willing to offer $8.08 billion US in aid to the automaker, while the Canadian government and the Ontario government will jointly offer $2.42 billion US ($2.9 billion Cdn).
The Canadian and Ontario governments will end up with a two per cent stake in a restructured Chrysler, while the U.S. government will hold eight per cent. Canada will get to appoint one independent director to a new Chrysler board. The U.S. will appoint four independent directors.
"Thanks to our joint efforts, there is now a road ahead to a stronger Chrysler and a stronger industry in the future on both sides of the border," Prime Minister Stephen Harper said in a joint written statement with Obama.
In a White House statement, Obama said Chrysler will come out of protection as a more viable company with "a new lease on life."
"No one should be confused about what a bankruptcy process means," Obama said. "This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler's revival."
A bankruptcy filing became expected after a group of about 40 hedge funds opposed a plan that would reduce the automaker's $6.9 billion US in secured debt. A group of four banks that together hold about 70 per cent of that debt is in support of the plan. Talks over the debt restructuring broke down overnight.
'Unjustified bailout'
Obama blasted the investment groups that didn't back the restructuring.
"A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified bailout," he said during a noon-hour address from the White House.
"They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them," he said.
Obama said that Chrysler and Italy's Fiat Group SpA have formed a partnership "that has a strong chance of success."
He said Fiat will provide technology to Chrysler and will commit to building cars at Chrysler plants.
Chrysler had a U.S.-government imposed deadline of 11:59 p.m. Thursday to work out a new plan to become viable again.
Harper is due in Toronto on Thursday afternoon as he and Ontario Premier Dalton McGuinty will discuss Chrysler's future. The announcement is slated for 2 p.m. ET at a hotel near Pearson International Airport.
Chrysler CEO leaving
In conjunction with the Chrysler restructuring, CEO Bob Nardelli said he will step down after the company emerges from creditor protection, which could take up to 60 days. Speaking on CNBC, Nardelli said he was not asked to leave the company, but said he thought it was the right time to go.
Nardelli has been in the CEO post at Chrysler since Cerberus Capital Management acquired control of the automaker in 2007.
In his address, Obama called Chrysler a pillar of the U.S. industrial economy, "but frankly a pillar that's been weakened by papering over tough problems and avoiding hard choices."
"For too long, Chrysler moved too slowly to adapt for the future — building and designing cars that were less reliable, less popular and less fuel-efficient than competitors. That's what brought us to a point where they sought taxpayer assistance," he said.
Chrysler Canada facts in brief
Employees: 9,400
Retirees: 13,000
Headquarters: Windsor, Ont.
Production Canada in 2008: 479,000
Units sold in Canada in 2008: 222,996
Number of Chrysler dealers: 450
Vehicles built in Canada:
Dodge Grand Caravan (Windsor, Ont.)
Dodge Charger (Brampton, Ont.)
Dodge Challenger (Brampton, Ont.)
Chrysler 300 (Brampton, Ont.)
http://www.cbc.ca/money/story/2009/0...ada-stake.html
U.S. President Barack Obama said Thursday the governments of Canada and the United States will offer $10.5 billion US support to Chrysler LLC, which will file for bankruptcy protection in New York state later in the day.
The U.S. government is willing to offer $8.08 billion US in aid to the automaker, while the Canadian government and the Ontario government will jointly offer $2.42 billion US ($2.9 billion Cdn).
The Canadian and Ontario governments will end up with a two per cent stake in a restructured Chrysler, while the U.S. government will hold eight per cent. Canada will get to appoint one independent director to a new Chrysler board. The U.S. will appoint four independent directors.
"Thanks to our joint efforts, there is now a road ahead to a stronger Chrysler and a stronger industry in the future on both sides of the border," Prime Minister Stephen Harper said in a joint written statement with Obama.
In a White House statement, Obama said Chrysler will come out of protection as a more viable company with "a new lease on life."
"No one should be confused about what a bankruptcy process means," Obama said. "This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler's revival."
A bankruptcy filing became expected after a group of about 40 hedge funds opposed a plan that would reduce the automaker's $6.9 billion US in secured debt. A group of four banks that together hold about 70 per cent of that debt is in support of the plan. Talks over the debt restructuring broke down overnight.
'Unjustified bailout'
Obama blasted the investment groups that didn't back the restructuring.
"A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified bailout," he said during a noon-hour address from the White House.
"They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them," he said.
Obama said that Chrysler and Italy's Fiat Group SpA have formed a partnership "that has a strong chance of success."
He said Fiat will provide technology to Chrysler and will commit to building cars at Chrysler plants.
Chrysler had a U.S.-government imposed deadline of 11:59 p.m. Thursday to work out a new plan to become viable again.
Harper is due in Toronto on Thursday afternoon as he and Ontario Premier Dalton McGuinty will discuss Chrysler's future. The announcement is slated for 2 p.m. ET at a hotel near Pearson International Airport.
Chrysler CEO leaving
In conjunction with the Chrysler restructuring, CEO Bob Nardelli said he will step down after the company emerges from creditor protection, which could take up to 60 days. Speaking on CNBC, Nardelli said he was not asked to leave the company, but said he thought it was the right time to go.
Nardelli has been in the CEO post at Chrysler since Cerberus Capital Management acquired control of the automaker in 2007.
In his address, Obama called Chrysler a pillar of the U.S. industrial economy, "but frankly a pillar that's been weakened by papering over tough problems and avoiding hard choices."
"For too long, Chrysler moved too slowly to adapt for the future — building and designing cars that were less reliable, less popular and less fuel-efficient than competitors. That's what brought us to a point where they sought taxpayer assistance," he said.
Chrysler Canada facts in brief
Employees: 9,400
Retirees: 13,000
Headquarters: Windsor, Ont.
Production Canada in 2008: 479,000
Units sold in Canada in 2008: 222,996
Number of Chrysler dealers: 450
Vehicles built in Canada:
Dodge Grand Caravan (Windsor, Ont.)
Dodge Charger (Brampton, Ont.)
Dodge Challenger (Brampton, Ont.)
Chrysler 300 (Brampton, Ont.)
http://www.cbc.ca/money/story/2009/0...ada-stake.html
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