OTTAWA – The Canadian and Ontario governments will give General Motors of Canada Ltd. and Chrysler Canada Inc. up to $4 billion in interim loans, which officials say is enough money to get the troubled automakers through restructuring.

"We've come to, or very close to, the fork in the road," federal Industry Minister Tony Clement said at a news conference, adding the current restructuring plans "do not go far enough to ensure long-term viability of the companies".

There will be no further help from the governments if the restructuring plans are not certified, a senior official with Industry Canada told reporters earlier.

In a deal to be finalized today, Chrysler will receive up to $1 billion over the next 30 days, conditional on the completion of an alliance with Italian car manufacturer Fiat SpA. Chrysler needs an alliance with Fiat to achieve economies of scale because right now it is not big enough to compete in the North American marketplace, the official said.

The governments are ready to loan up to $3 billion to GM with a deadline of 60 days for their restructuring plans but the agreement has not yet been finalized.

The official said the governments are not satisfied with labour cuts GM has already announced and are looking for further reductions in what he called "legacy costs," such as pensions and benefits for retired workers.

Conditions on the loans include: limits on executive pay, including performance pay, particularly for Canadian executives; regular reports throughout the duration of the loan; and unimpeded access to borrowers' records.

In general, the official said both companies must reassess assumptions they made about how many cars they could sell in North America and return to the government with more realistic estimates.

In the case of Chrysler, which will get the first $250 million by the end of day, the funding was needed just so the company could meet payroll, Clement said.

"Very clearly if the money had not been forwarded today, they would not been able to meet payroll today or tomorrow," the minister said.

"We were faced with this choice of a disorderly bankruptcy where if liquidation would have been the result, whole plants or parts of plants could have been ripped up from Canadian soil and transferred to another country, India or China, who knows, and obviously the jobs would have gone with them."

U.S. President Barack Obama said today that neither General Motors nor Chrysler has proposed sweeping enough changes to justify further large federal bailouts, and demanded "painful concessions" from creditors, unions and others as their price for survival.

Obama also raised the possibility of a controlled bankruptcy to help either or both "restructure quickly and emerge stronger" – uttering the term that industry and union officials have warned repeatedly could lead to the collapse of an entire domestic industry.

The U.S. president said the plan was drafted after consulting officials in Canada and Mexico, adding that the Canadian government has "indicated its support for our approach."

With his words, Obama underscored the extent to which the U.S. government is now dictating terms to two of America's iconic corporations – forcing the departure of Rick Wagoner as CEO of General Motors (NYSE: GM), and bluntly warning it may pull the plug on either or both companies.

An official said the Canadian federal government is not asking for any changes to the Canadian executive team.

The official would not comment on a tax dispute Chrysler is having with Ottawa except to say that the issues are separate and that the loan is not a way to collect back taxes from the company.

Chrysler has said that in the current loan negotiations with the federal government, the company needs the Canada Revenue Agency to provide a letter saying the automaker would not be required to put up more money as collateral while a lengthy tax dispute continues.

The auto makers were originally supposed to submit finalized restructuring plans, including new labour contracts, to both governments by tomorrow in order to receive the financial assistance they have asked for.

GM is asking for more than $6 billion and Chrysler is asking for $3 billion in Canada, which is home to about 20 per cent of the North American car industry.

Prime Minister Stephen Harper has said the government is prepared to do its 20-per-cent share but the Industry Canada official said GM and Chrysler would not necessarily receive the amounts they are asking for.

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Harper and Ontario Premier Dalton McGuinty originally announced the bridge financing last December 20.

With files from Star wire services.

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