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Canada and Ontario: Joint support for General Motors restructuring

1 June 2009

TORONTO

The Government of Canada and the Government of Ontario are extending an interim loan and a medium-term restructuring loan to General Motors of Canada Limited (GMCL) in support of further restructuring. In conjunction with the U.S. Government, both governments are also supporting a court-supervised restructuring of General Motors (GM) Corporation in the U.S. through joint Canada-U.S. debtor-in-possession (DIP) financing.

Based on internal analysis and third-party due diligence, both Canada and Ontario are satisfied that General Motors’ restructuring plan improves on its competitive position in the marketplace. New agreements with labour unions, dealers and other stakeholders indicate the company will have a competitive cost structure over the longer term.

Next steps following certification of General Motors’ restructuring plan

Now that governments on both sides of the border have approved General Motors’ restructuring plan, the governments of Canada and Ontario are committing to the following financing measures in support of the company’s return to a viable, sustainable future:

As announced on May 4, 2009, US$413 million (C$500 million) in working capital loans were flowed to GMCL. In addition, Canada and Ontario will provide up to US$9.1 billon in new short-term funding — most of which will go to GMCL and up to US$3.2 billion will support debtor-in-possession financing for GM Corporation.

The total size of the package is up to US$9.5 billion.

At the conclusion of the court-supervised process, all of this funding will transform into a loan of up to US$1.3 billion for GMCL; US$403 million of preferred shares in GM Corporation; and an 11.7 percent ownership stake in GM Corporation.

The governments will also have the right to appoint an independent director to the board of the newly restructured company.

Conditions on additional support

The federal and provincial governments will exercise rigorous oversight over the use of additional taxpayer money as part of their ongoing due diligence processes. As part of that, the conditions include:

commitment to implement GMCL’s approved business plan;

limitations on dividend payments;

limitations on executive privileges and compensation;

limitations on executive aircraft;

restrictions on expenses;

access to information and right to audit; and

minimum cash requirements.

Government initiatives in the auto industry to date

Following is a summary of the initiatives from the government of Canada and the government of Ontario to date in support of the auto industry:

On May 8, 2009, the $12-billion Canadian Secured Credit Facility was launched to improve credit availability for consumers to purchase and lease new vehicles.

On April 30, 2009, the federal and Ontario governments provided $3.775 billion in a joint package of loans to support the restructuring of Chrysler. This support is proportional to the US$12.08 billion package announced by the U.S. Government.

On April 16, 2009, $145 million in funding over five years for Automotive Partnership Canada to support research collaboration and projects to keep the Canadian auto industry competitive and sustainable.

On April 7, 2009, the Canadian Warranty Commitment Program was launched to ensure consumer warranties are honoured on new vehicles purchased from General Motors of Canada Limited and Chrysler Canada Inc. during a limited period of restructuring.

On April 7, 2009, $700 million was added to Export Development Canada’s (EDC) Accounts Receivable Insurance (ARI) program available to auto parts suppliers, increasing coverage to $1.25B billion a level proportionate to the U.S. Auto Supplier Support Program.

On December 20, 2008, the federal and Ontario governments offered $4 billion in interim loans to General Motors of Canada Limited and Chrysler Canada Inc. The funds were re-confirmed on March 30, 2009.

Budget 2008 created the Automotive Innovation Fund (AIF), established to provide $250 million over five years to automotive firms in support of strategic, large scale research and development (R&D) projects to build innovative, greener and more fuel-efficient vehicles.

Budget 2008 provided $23.2 million over four years for the AUTO21 Network of Centres of Excellence based at the University of Windsor. AUTO21 supports more than 220 researchers and 500 students working on 52 auto-related research and development projects.

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