Taxpayers will be left on the hook for some of the $13.3-billion they provided to help bail out Chrysler Group LLC and General Motors Co. , Finance Minister Jim Flaherty says.
"At the end of the day, there's not going to be full recovery of the taxpayers' investments that were made back in 2008-2009 - in the sense of cash recovery," Mr. Flaherty said Monday.
"But what is the value of preserving an industry? What is the value of preserving 52,000 jobs in our country? You have to put a value on those, which are pretty substantial values in my view."
He made his comments at Chrysler's Etobicoke Casting Plant in Toronto, where a ceremony to mark the repayment by the auto maker of $1.7-billion plus interest also gave Chrysler chief executive officer Sergio Marchionne the opportunity to thank the federal and Ontario governments publicly.
The governments provided $2.9-billion in loans to Chrysler, which has now repaid $1.7-billion. Chrysler paid $238-million in interest, while the remnants of its bankrupt predecessor company paid $6-million (U.S.) in interest.
That leaves $1.2-billion (Canadian) in loans outstanding, some of which could be recouped through the sale of the governments' 1.7-per-cent stake in the equity of the company. Analysts estimate that stake is worth about $110-million.
Discussions between the governments and Chrysler have begun on the auto maker buying out that equity.
"We will be quite willing to consider purchasing Canada's interest," Mr. Marchionne said, adding that there have been no talks yet about how much the holding might be worth.
"I can't pay [Ottawa]more than I'm paying the Americans," he said as he toured the plant, alluding to negotiations to purchase the 6 per cent of Chrysler held by the U.S. government.
The Chrysler CEO and company officials sported buttons bearing the word "Paid."
When Mr. Flaherty noted that he would have to get one of the buttons, Canadian Auto Workers union president Ken Lewenza walked up and pinned one on his lapel.
GM received $10.8-billion. The auto maker repaid $1.5-billion of that plus $83-million in interest. The governments exchanged some of the loans for 11.7 per cent of GM"s common shares and $400-million worth of preferred shares.
Ottawa and Ontario sold about $1-billion worth of common shares in GM's initial public offering and now hold about $4.4-billion worth of common shares.
Both Mr. Flaherty and Mr. Marchionne acknowledged Monday that the decision to bail out the industry was difficult and brought heavy criticism.
"They gave us a second chance," Mr. Marchionne said, "something that happens very rarely in life and they gave us not only the hope for our survival, but also the great opportunity to build the future."
Doug Porter, deputy chief economist of BMO Nesbitt Burns Inc., said he supported the bailouts in 2009 and has been pleasantly surprised at how quickly the auto industry has turned around and how much of the money has been repaid.
"I believed that we were dealing with such an extreme set of circumstances in the global economy that the bailout was warranted in this specific case," Mr. Porter said.
Replacing the government loans with new debt raised on the capital markets will cut Chrysler's $1.2-billion (U.S.) annual interest bill by $300-million, Mr. Marchionne said.
Earlier this month, Chrysler posted its first profit since emerging from bankruptcy protection.
With a file from CPReport Typo/Error