GM has negotiated a restructuring plan with the U.S., Canadian and Ontario governments, but the extent to which Canadian taxpayers will be on the hook for the automaker’s legacy costs—including pensions—remains unclear.
Senior government officials told reporters today that a US$59 billion deal has been reached, which will hopefully see the world’s former No. 1 automaker through bankruptcy and restructuring to ultimately emerge as a viable company.
The governments of Canada and Ontario have pledged up to C$10.32 billion for the 8-year deal. Canadian taxpayers will become owners of approximately 12% of the company while their American counterparts will own approximately 60%. A 13-member board of directors will be appointed to the new GM, of which one of members will be Canadian.
Pension questions remain
However, the Canadian taxpayer’s contribution to GM’s ailing pension plan—projected to be underfunded by C$7 billion—has not yet been clarified. Senior federal and Ontario government officials, as well as Prime Minister Stephen Harper, avoided the subject during a Toronto press conference this afternoon.
Federal Industry Minister Tony Clement had previously said that Ottawa would not be providing taxpayer’s money to help fund GM’s pension plans, while Ontario Premier Dalton McGuinty recently suggested that his government was willing to consider the move.
Under the deal, GM is responsible for US$4 billion in legacy costs, including pensions, health benefits and previous restructuring costs.
U.S. President Barack Obama announced today that no U.S. pension plan closures will occur as a result of the automaker’s bankruptcy filing. GM’s European pension plans will also remain untouched.
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