Evidence of meeting #4 for Subcommittee on the Automotive Industry in Canada in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chrysler.
A recording is available from Parliament.
7:40 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
I appreciate that, because unfortunately I was unable to make it when General Motors was here, but obviously they're asking for similar money for restructuring purposes.
7:40 p.m.
President and Chief Executive Officer, Chrysler Canada Inc.
We are hopeful that the Canadian secured credit facility that was pledged by the federal government will help to alleviate a lot of the credit challenges currently in the market.
7:40 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
I'm from Burlington. My riding is Burlington; it's close to Ford. Ford is in Oakville. Ford is in a little bit different position, or so they claim, from the one you guys are in. Even though I have 1,500 Ford workers in my riding, the calls I'm getting are saying, “Be sure we're able to get our money back.”
I'm assuming the business plan you're providing has the concept of repaying money to the taxpayer. How long do you foresee that will be? With your plan, based on what you have in front of you now and based on your assumptions with the marketplace, how long will that be in terms of a payback to the taxpayers?
7:40 p.m.
President and Chief Executive Officer, Chrysler Canada Inc.
I have a couple of comments.
Chrysler Canada in particular has received government money in the past. We have an unblemished track record of paying back, with interest, all the money we have ever received from either the federal or provincial government in the past, and with the funding we received in the early eighties, a handsome profit on top of it. This loan would be no different. It would be an interest-bearing loan. We're not looking for free money. We're looking to collateralize that loan with Canadian assets, not far-flung assets, and we anticipate again mirroring our U.S. treasury department process with repayments, beginning in 2012, on the principal.
7:40 p.m.
Conservative
7:40 p.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
Thank you, Mr. Chair.
I want to go back to the Fiat negotiations. I think this ties in with where we're at with Treasury in the U.S. Is either one—either Fiat or the U.S. government—making it a condition of the continued negotiations and resolution that Fiat gets assured that the U.S. comes forward with the funds, and obviously Canada as well; and is the U.S. government saying the same thing, that they want to deal with Fiat before they'll come forward with their funding?
7:40 p.m.
Vice Chairman and President, Chrysler LLC
Fiat has made it clear they will not do an alliance with Chrysler without the federal U.S. treasury department providing the loans as we requested.
7:40 p.m.
Vice Chairman and President, Chrysler LLC
They have also asked me to make sure I ask for the loans in Canada as well, yes.
7:40 p.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
This may be obvious. The timelines, then, for resolving whatever outstanding differences you have with Fiat would be along the same timelines as what you're looking for in terms of getting the funding from this government and the U.S. government?
7:40 p.m.
Vice Chairman and President, Chrysler LLC
I think the way it's going to happen is that it's all going to come into a merge date that will be closer to the end of the month, but you're right, it's all coming together at the same time.
7:40 p.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
Good. Is that realistic from Fiat's vantage point, and yours, in terms of due diligence?
7:40 p.m.
Vice Chairman and President, Chrysler LLC
What will happen is that you'll go into doing the major due diligence. Then there'll be an agreement. Then you'll go into a definitive agreement. It usually takes lawyers months to make sure everything is right. It is similar to when Cerberus bought Chrysler. That deal ended on May 14, and the final closing wasn't until August 3. So there will be a bridge period to get the final closing, but the commitment will be made soon after the 31st. That's my expectation.
7:45 p.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
From what I've seen of the negotiations, Cerberus will be out of the picture, then, completely as far as Chrysler is concerned.
7:45 p.m.
Vice Chairman and President, Chrysler LLC
That is a hard one to say, and let me explain why. There are first lien holders. They are debt holders. The first lien banks have about $7 billion of debt, and if they convert some of that to equity.... We have to talk to banks. They're first lien holders, and they're secured. So those negotiations are going on. Cerberus is going to get second lien, hopefully, with the Daimler agreement, and that will be converted to debt. They will not be the majority holder of Chrysler any longer. That is what is anticipated once we come out of that. They may still have some equity, but it is to be determined what they will do with it.
7:45 p.m.
NDP
Joe Comartin NDP Windsor—Tecumseh, ON
On page 6 of your presentation, at the very bottom of the page, you talk about $5 billion from creditor groups. Could you explain what that's about?
7:45 p.m.
Vice Chairman and President, Chrysler LLC
Sure. There are only three creditor groups left. One is the first lien banks. The second is the UAW VEBA fund, and the third is the U.S. Treasury.
7:45 p.m.
Vice Chairman and President, Chrysler LLC
--they could decide to give it to us interest free or to forgive it. We don't think so, and we don't believe that the UAW VEBA will give us any more either, so we have to go after the tier one banks. But it's written in a way that says that there are only three creditors left.
7:45 p.m.
Conservative
7:45 p.m.
NDP
Brian Masse NDP Windsor West, ON
One of the things that have been presented to the committee has been the concept of a purchase incentive to retire older vehicles. The United States has a program, I believe, of up to $7,000 to encourage a move towards a spectrum of low-emission vehicles. What is your position on that? Second, can you highlight what's being done in the United States on this as well?
7:45 p.m.
President and Chief Executive Officer, Chrysler Canada Inc.
Naturally, as the second-highest-selling vehicle manufacturer, and the first last month in Canada, we are in favour of all types of stimulus packages to promote the sale of new vehicles, be it in Canada or in the United States or even around the world, and of economic stimulus in general. I know this has played out in the newspapers quite a bit over the past few days.
We want to be crystal clear, though, that we don't consider it any type of substitute at all for the request for liquidity that we are currently seeking, because in the Canadian marketplace, the biggest benefactors of any kind of automotive stimulus, given the fact that about 85% of the vehicles sold in Canada are produced outside Canada, will be manufacturing operations in the U.S., Mexico, Asia, and Europe, as opposed to the manufacturers in Canada.
7:45 p.m.
Conservative
The Chair Conservative Michael Chong
Thank you very much, Mr. Bigland.
Our last member for this panel of witnesses is Mr. Lake.