Quebec to bail out troubled businesses

The Quebec government will spend $1 billion to help companies stay afloat, Economic Development Minister Raymond Bachand announced Wednesday.

The bailout includes $750 million in loan guarantees and $250 million in direct loans.

Bachand said only healthy companies with at least three years of positive cash flow need apply.

"This is not for lame duck companies," Bachand told reporters. "This is for good companies that have been making money and have been stuck with sales, their inventories and the recession problem."

The loans and loan guarantees will start at $250,000 and peak at $15 million, making them more helpful for small and medium-sized businesses than for large corporations. Many of the most vulnerable sectors of Quebec's economy will not be eligible, including the forestry industry, mines and retailers.

'We want these companies to be there in 12 months when the economy picks up' Raymond Bachand, economic development minister

The province hopes the businesses will use the money to refinance their debt, pay their bills and acquire new equipment. Quebec's investment arm, Investissement Qubec, will evaluate applications in co-operation with financial institutions.

During the recent election campaign, Premier Jean Charest warned of an impending economic storm which threatened to make a mess of Quebec's economy and job market. Bachand hopes his plan to make credit more easily available will hold off the effects of a short-term slowdown.

"This storm is coming. It doesn't appear to be totally embedded in Quebec. It's raining in Quebec but we don't still have a huge storm right now," said Bachand.

Bachand conceded that Quebec taxpayers might lose money in the deal, but Quebecers would lose more if the province didn't protect the "core" businesses of the economy.

"The return for Quebec taxpayers is that people are going to stay at work. At work they have dignity and they pay income taxes and the companies will stay alive. We want these companies to be there in 12 months when the economy picks up," he said.

Federal government to help troubled shipyard

Less than an hour after politicians in Quebec City announced their bailout plan, federal officials were on the other side of the St. Lawrence River near the city of Lvis with an announcement of their own.

International Trade Minister Stockwell Day announced $380million in credit financing and guarantees for the Davie Yards Inc. The money will allow the return of 1,100 workers temporarily laid off last week.

The shipyard is the largest in Canada. More than 700 ships have been built in the company's hangars since it opened in 1825.

Most of the $380 million will come in the form of loan guarantees to companies that owe money to Davie so they are able to pay their bills. Davie will also benefit from a $50 million line of credit.

Day said the plan will allow Davie to complete a major contract for five large ships.

"We wanted to make sure the financial facility was in place that they could move ahead, get this done, that the finances would be there," Day told workers and reporters gathered in the shipyard's main hangar.

Just last week, Davie announced a plan to shut down its Lvis operations and lay off 1,100 employees until mid-January to preserve cash. Clients were not paying their bills, and in turn Davie was unable to pay its suppliers.

Management at the shipyard is unsure when the laid-off workers will be back on the job.