The Chrysler Loan Guarantee Board met yesterday for nearly four hours but reached no decision on whether to okay $1.5 billion worth of loan guarantees for the nearly bankrupt automaker.
The board will meet again today at noon. It's chairman, Treasury Secretary G. William Miller, said "We are making awfully good progress," but added there is "one matter that needs additional information."
Presumably that matter is the status of a $200 million loan guarantee from the Canadian government that is part of a $1.4 billion package of other funds the corporation must raise to qualify for the U.S. government guarantee.
Prime Minister Pierre Trudeau of Canada said yesterday no decision on his government's participation would be made until Monday.
Miller described the extended negotiations over the loan guarantee's details as "long and difficult" and said that "considerable progress has been made. . . . The board has a constructive attitude."
Chrysler came to the government for help last September, seeking $1.2 billion in federal loan guarantees in the face of soaring losses as car buyers turned toward small, fuel-efficient cars that Chrysler wasn't able to supply.
After a long sharp debate, Congress in December approved a rescue plan offering the auto maker $1.5 billion in federal loan guarantees, provided Chrysler could raise $1.43 billion on its own along with nearly $600,000 in wage and pay concessions by employes. By last week Chrysler, its major creditors and the loan guarantee board had agreed on the major elements of outside assistance, leaving only the Canadian issue to be resolved.
Canada had offered Chrysler $210 million in loan guarantees, about one-fifth of that from the Province of Ontario, where Chrysler Canadian production lines are located, and the rest from the Federal Canadian Government.
But Chrysler, which has had its troubles with Toyotas, Hondas and Volkswagens, ran into an unexpected foreign obstacle in the Quebec separatist movement.
Quebec will vote March 20 on whether to negotiate a separation from Canada, a supercharged political issue for Canadian politicians. The assistance to Chrysler was seen by all sides as helping the separatist cause, standing as an example of federal action benefitting neighboring Ontario province, where most of Chrysler's 14,500 Canadian employes live.
Chrysler appeared slow to recognize how hard it would be hit by the current slump in auto sales. The amount of federally guaranteed loans that Chrysler says it will need this year has escalated sharply from an estimate of $250 million to the current figure of $750 million. The steep losses in the first quarter indicate that the entire $1.5 billion may not be enough to keep Chrysler solvent until a new line of compact front-wheel-drive cars can improve Chrysler sales. The new K-body cars go on sale this autumn.