GM May Unload Opel for a Song
April 20, 2009

By Bill Visnic

Hustling to clean up its balance sheet and deal with some atrophied tentacles of its overseas operations prior to a June 1 deadline from the Obama administration, General Motors Corp. could be preparing a deal to offload -- for a paltry sum -- its cash-poor Adam Opel AG European operations, the Financial Times reported today.

The paper says GM wants an investor to pay the equivalent of about $650 million for Opel/Vauxhall. But GM would then invest the money in the new company formed by its European operations, becoming one of, if not the largest, of the new company's shareholders.

Moreover, given the complexity of GM's current financial situation and the compressed time frame for GM to right its ship lest the Obama administration's Automotive Task Force decree GM should be taken through bankruptcy, GM wants this Opel proposal to proceed in a matter of weeks, the Financial Times story said.

With the bulk of Opel's manufacturing and administrative presence in Germany, the government has taken a keen interest in seeing that Opel stays solvent, but has continually insisted the state will not proffer a bailout. Meanwhile, GM executives, including new CEO Fritz Henderson, have warned the company's European operations would begin to experience a cash crunch in the second quarter of this year.

In the weeks since the Obama Auto Task Force set the new June 1 deadline, the focus of GM's restructuring has been on its North American operations and determining the fate of its less-prominent marketing divisions that include the GMC and Pontiac divisions. But Opel is a major auto manufacturer in Europe and holds particular significance to Germany and its powerful labor unions, which have insisted an outright shutdown of Opel would be disastrous to the nation's economy and the auto industry's supplier base.

The Financial Times also reported GM now is prepared for the possibility of receiving little or nothing for the sell-off of its Saab Automobiles unit, which earlier this year filed for the Swedish equivalent of bankruptcy protection -- but is said to be currently considering takeover deals from numerous entities.

PHOTO:

1. Opel Insignia is one of the brand's newest models, which some have suggested could be sold by GM's Buick division in the U.S. (courtesy of General Motors Corp.)

Posted by Bill Visnic at 11:49 AM under Business , Companies , GM , News | Comments (4) | digg this | Seed Newsvine

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