General Motors’ European operations are quickly running out of cash and will run out completely by the end of the second quarter without aid from European governments. With the financial situation looking so bleak, GM said it would even be willing to give up majority ownership of Opel.
Last week, GM announced its plan to spin off German subsidiary Opel AG. Today, GM Chief Operating Officer, Fritz Henderson, said that GM is open to a wide variety of options in its spinoff plan and no legitimate option is off the table- including keeping a minority stake in the company. In the plan last week, GM indicated it wished to keep a majority share of Opel. Henderson emphasized GM’s wish to continue product development cooperation with Opel with a majority or a minority stake in the company.
GM of Europe is currently asking for €3.3 billion ($4.2 billion) in financial aid to avoid a cash shortage in the second quarter. Henderson and Carl-Peter Forster, president of GM Europe, talked out a plan to create a pan-European company where the aid would come from all countries where Opel has operations.
GM executives today said that the spinoff plan would initially involve giving equity stakes to European governments instead of private investors. Henderson said that there has been no discussion with private investors in buying Opel and those discussions would take months. Forster later said that giving the governments equity shares in the company in exchange for financial aid is the only immediate course open to GM.
In addition to asking for aid, GM is trying to win cost savings from suppliers and unions and negotiating the possibility of plant closures with European governments. If Opel fails, 200,000 to 300,000 people could lose their jobs in Europe.
If Opel does receive aid from European governments, Forster said that no European aid would be transferred to parent company GM which is also seeking loans from the U.S. government.
Source: Automotive News