TORONTO -- Massey-Ferguson Ltd. says the government aid package announced this week should help the crippled farm machinery giant win needed financial support from other lenders around the world.
The company reacted 'with great satisfaction' to the joint announcement of financial guarantees by the federal and Ontario governments, Massey-Ferguson said Tuesday in a prepared statement, laying out details of the bail-out.
Industry Minister Herb Gray and his Ontario counterpart Larry Grossman Monday announced the two governments would partially guarantee new equity investments in Massey-Ferguson to keep the multi-billion dollar company out of receivership.
Under the terms of the plan, individuals could risk investment in M-F's refinancing plan without the danger of losing their entire investment if the company folded.
M-F said Tuesday the refinancing plan called for the issue of $700 million (Canadian) in common and preferred shares, $200 million of which would carry a government guarantee 'as to a substantial portion' of the investment and would be sold only to investors acceptable to the governments involved.
Another $150 million in convertible preferred shares would be issued to the Canadian Imperial Bank of Commerce, M-F's largest creditor, and $350 million would comprise an underwritten public issue of convertible preferred shares underwritten by the company's other lenders.
The company said the plan would infuse $425 million of new equity into the debt-ridden firm while $275 million of existing debt would be converted into equity.
Conditions imposed by the two governments in return for the guarantees were likely to include undertakings by M-F with respect to its Canadian holdings and some restructuring of its existing debt.
'The major participation of the Canadian sector should provide a strong incentive to other lenders around the world to give their support to enable this package to be realized,' M-F said.
'This action by the two governments is a crucial step which will allow the company to press ahead with negotiations with its principal lenders and prospective investors.'
New Democratic Party MP Ian Deans complained in Ottawa it was 'most unusual' that the government would guarantee new investment in M-F without seeking guarantees that jobs remain in Canada.
Gray told Deans the preservation of jobs, continued research and development and a commitment to production and investment by the company in Canada would be 'among the very important conditions' attached to the aid offer.
Gray said he did not want to prejudice the outcome of negotiations between the company and its lenders by making a premature disclosure of the details of the assistance package.
