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Posts Tagged ‘opel bailout’

GM Going it Alone With Opel

Maker withdraws aid requests, will self-fund turnaround.

by on Jun.16, 2010

Opel CEO Nick Reilly will have to lead a turnaround without government aid.

After having the Berlin government reject a bailout request for its troubled Opel subsidiary, General Motors is withdrawing a bid for help from other European governments and will now seek to fund the operation’s recovery on its own.

The announcement is the latest twist in a saga that began even before GM’s own U.S. bankruptcy, last year, which triggered a $50 billion package of aid from the American Treasury.  At one point, while the giant automaker was struggling for survival, it gave serious thought to selling a majority stake in German-based Opel and its British sibling Vauxhall.

But in recent months, with its own recovery proceeding better than anticipated, GM has not only been able to hang onto Opel, but now believes it can handle the financing of the unit’s turnaround.

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“Given the need to proceed quickly,” a GM statement said, it can no longer wait while trying to negotiate assistance from various European governments.  That bid was dealt a severe blow, last week, when the administration of German Chancellor Angela Merkel rejected the latest request for Opel aid.


German Workers Give Opel $332 mil in Concessions

Will government bailout finally come though?

by on May.21, 2010

German Chancellor Merkel will have to decide whether to follow job concessions with federal government aid.

Reluctant workers have agreed to give General Motors’ troubled Opel subsidiary more than $300 million in concessions, a move that could help free up millions more in bailout money from the German government.

Talks between Opel and its unions have been underway since GM’s European unit started slipping perilously towards insolvency, in early 2009, at the same time General Motors itself prepared to file Chapter 11.

In all, Opel says it won $332.5 million in givebacks from its workers, a deal that includes unspecified job cuts.  A one-time payout to workers has been eliminated, and a 2.7% pay raise has been delayed.  Workers also have agreed to reductions in holiday and Christmas bonuses.

Early on in the discussions, the automaker had discussed job cuts that some analysts forecast could run to more than 10,000.  Opel and its sibling, British-based Vauxhall brands currently employ 48,000 workers, about half in Germany.

The bulk of the concessions come from IG Metall, the largest of the automaker’s unions and one of the most powerful labor bodies in Europe.  In return, the automaker has agreed to give German workers a new small car to produce.

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While the concessions should help, Opel is still struggling to pull together a reorganization plan that will require more investment by parent GM – as well as financial aid from European governments, most notably Germany.

The Berlin government offered some initial assistance, last year, but later demanded repayment after GM nixed the proposed sale of a controlling stake in its subsidiary to a Canadian-Russian consortium let by Toronto-based supplier Magna.


Germany Rejects GM Bid to Help Opel

Automaker will need find help elsewhere.

by on Nov.12, 2009

Taking her soccer ball and going home since German jobs won't be overly potected?

Taking her "soccer ball" and going home since German jobs won't be overly protected?

Still smarting over General Motors’ decision to call off the sale of its German-based Opel subsidiary, government officials, in Berlin, have told the U.S. maker they won’t come up with any aid to keep Opel operating.

The Germans are also expecting GM to pay back the balance of  a $2 billion bridge loan, provided earlier this year, to keep Opel from failing, government officials have confirmed.

The bad news was relayed to interim Opel CEO Nick Reilly, and GM’s international director, John Smith, during a meeting with German Economic Minister Rainer Bruederle.

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In-Depth News and Analysis!

While General Motors CEO Fritz Henderson said, this week, during a visit to Germany, that the automaker will cover a “sizable” share of Opel’s restructuring – and had also noted, recently – that the subsidiary’s finances are improving – GM is still hoping to raise additional money from some of the other European governments who have a stake in Opel’s survival.


Is GM’s Deal to Sell Opel Falling Apart?

Was there ever a deal in the first place?

by on Jun.30, 2009

The proposed sale of Opel to the Canadian supplier, Magna, could have hit a roadblock.

The proposed sale of Opel to the Canadian supplier, Magna, could have hit a roadblock.

Talks between General Motors and the Canadian auto parts giant, Magna International, appear to be running into snags, threatening the planned sale of a majority stake in GM’s huge and troubled European subsidiary, Opel.

A number of alternatives bidders are now pushing to displace Magna as the preferred partner in an Opel sale, including the Belgian industrial holding company, RHJ International, and China’s Beijing Automotive Industry Corp.  The Italian automaker, Fiat, is also reportedly looking for ways to revive its own bid, which lost out to the offer from Magna.

The unexpected turns of events comes precisely one month after the Canadian supplier and its Russian ally, Sberbank, appeared to lock down the purchase of a majority stake in Opel, the German-based GM operation that was teetering perilously close to insolvency.  The U.S. automaker was under intense pressure to conclude a deal with one of three final bidders in order to win a $2.5 billion bridge loan from the German government.

But “the initial celebration” was premature, a source close to Opel tells  “What was signed was a Memorandum of Understanding (MOU), not a sales agreement.  And since then, others have come along.”