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Posts Tagged ‘Opel Vauxhall reorganization’

Some Hope at Opel as UK Agrees to Loan Guarantee

Still no support from Germany or Opel's German unions.

by on Mar.15, 2010

The viability problem remains centered in Germany where half of Opel's workers are.

Some small steps toward implementing the latest Opel/ Vauxhall “viability plan” occurred today in Europe as the UK government announced a €300 million loan guarantee to help secure Opel/Vauxhall’s operations in Britain.

Discussions with governments in other European countries continue, and Opel “is hopeful” that it will make similar progress.

In Spain, local management and unions reached an agreement to implement the planned restructuring measures at the manufacturing plant in Zaragoza. The agreement, which still needs to be ratified, calls for the elimination of 900 jobs there.

“Today marks an important step for the future of Opel/Vauxhall,” said Nick Reilly, Opel/Vauxhall CEO. “This shows significant progress in our efforts to secure loan guarantees from European governments and to get support from our employee representatives. We very much appreciate the support of Lord Mandelson and the British Government, which is a vote of confidence in our company. I’m also grateful for the Spanish government’s role in moderating the discussions between management and unions resulting in the important agreement reached early this morning.”

Last week, General Motors announced that it would triple the investment it was willing to make in its money-losing Opel/Vauxhall subsidiary from €600 million to €1.9 billion or ~$2.6 billion of the $5 billion needed to fix the company.   (more…)

German Government Out Bluffs Opel, So Far

GM triples offer, without firm commitments from E.U. governments. Maybe it's time to move toward bankruptcy.

by on Mar.09, 2010

Europeans appear content to let U.S. taxpayer-owned and subsidized GM carry the Opel restructuring burden.

Last week, General Motors announced that it would triple the investment it was willing to make in its money-losing Opel/Vauxhall subsidiary from €600 million to €1.9 billion or ~$2.6 billion of the $5 billion needed to fix the company.

Nick Reilly, CEO of Opel/Vauxhall, said that the latest offer – or more likely bargaining position already privately set forth to reluctant European governments – would now equal more than 50% of the overall funding required to keep Opel solvent and provide for the new products it desperately needs. The GM contribution would be made with both equity and loans.

GM has been seeking restructuring money from European governments since the fall of 2008 when it was becoming clear that it, along with its subsidiaries including Opel,  were insolvent.

Notable in its absence of support is Germany, where resentment still runs deep over GM’s refusal last November to sell Opel to Canadian supplier Magna and Russian Sberbank. At the time, GM said Opel was of strategic importance because of its engineering services and European presence.

Under its previous announced viability plan, Opel/Vauxhall had estimated funding requirements of €3.3 billion. However, as negotiations dragged on, an additional €415 million had been requested by the respective European governments to offset the potential impact of “adverse market developments.”

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Bitte!

GM says it now will contribute more than 50% of the overall funding.  As a result, the requested loan guarantees from European governments will decline in total from €2.7 billion to under €2 billion. This is still  a high risk proposition for governments.

GM claims remain no “potential liquidity risks” this year.

The latest GM gambit came – and went – without any immediate corresponding public commitments from European national governments in the countries where Opel/Vauxhall operates.

Thus far, the Europeans appear content to let U.S. taxpayer-owned and subsidized GM carry the burden without the involvement of European taxpayers.   (more…)

Opel Still Lacks Government Funding of €2.7 billion

GM unveils reorganization plan in bid to influence politicians.

by on Feb.09, 2010

GM is still running the Euro political slalom in hopes of loans before it runs out of cash.

The Chief Executive Officer of  loss making Opel/Vauxhall, Nick Reilly, today announced what he claims is a five-year €11 billion “Plan for the Future” that he says will update 80% of Opel/Vauxhall vehicle lines.

Reilly also said today that the external auditor, Warth & Klein, called the plan “sound and viable.”

Opel formally applied for loans or loan guarantees from the German government at the same time.

As part of the plan, Opel owner General Motors is looking for €2.7 billion through loans or loan guarantees from European politicians. Thus far the Europeans appear content to let U.S. taxpayer-owned and subsidized GM carry the burden without the involvement of European taxpayers.

This is a showdown not unlike the one GM faced in the U.S. when it sought government aid, that after much posturing, was eventually forthcoming. However, it took a bankruptcy to accomplish, something that is not being seriously discussed thus far, or at least publicly, in Europe for Opel.

GM has been seeking money from European governments since the fall of 2008 when it was becoming clear that it along with its subsidiaries were insolvent.

When it canceled the sale of Opel last fall to Magna and decided that Opel was strategically too important to the world’s second largest automaker, GM clearly placed itself in a weakened bargaining position.

“We have no reason to doubt that we will win support from those governments that have an interest in a long-term and sustainable future of Opel/Vauxhall, which in turn will provide long-term security for several thousand jobs across Europe,” a GM spokesperson told TheDetroitBureau.com. “We have been in very constructive talks with all European governments with Opel/Vauxhall sites and are confident that we will win support for our plan.”

GM has already injected €600 million into the new Opel/Vauxhall business. In addition, GM provided €650 million in advanced payments in January to ensure Opel solvency.

Critics claim that the only reason GM had the cash for such a transfer of funds is because U.S. and Canadian taxpayers have given it $50 billion. (Click here for that story.) They also note that the European Union central government is vehemently against bailouts of automakers, although it readily pumped billions into banks and other financial institutions last year.   (more…)