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GM's Opel withdraws European aid applications

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GM to fund Opel revamp, withdraws state aid requests

Paul McVeigh June 16, 2010 14:31 CET

General Motors Co. will fund a restructuring of Opel/Vauxhall without state aid after the automaker decided to withdraw applications for government loan guarantees from European governments.

GM plans a 3.7 billion euro ($4.5 billion) reorganization to cut its European capacity and workforce by a fifth and rejuvenate the bulk of Opel's model range through the end of 2014.

Last week, the German government refused GM's request for 1.1 billion euros in loan guarantees from the country's state rescue fund for companies hit by the economic recession. The UK and Spain had earlier indicated they would be willing to provide state aid toward 1.8 billion euros sought by GM from European countries with Opel factories.

Opel CEO Nick Reilly said the company could not afford to have uncertain funding plans and new time-consuming complex negotiations at a time when the carmaker needs to keep investing in new products and technologies.

"In these circumstances, and given the need to progress the plan quickly, it has been decided to fund the requirements internally. GM's recently improved financial strength has also been a catalyst for making this decision," Opel said in a statement.

Reilly said Opel's funding needs have not changed, adding: “We are grateful for the support of our parent company, which will allow us to move forward with confidence in this very competitive industry."

With new products and the impact of restructuring, Opel expects to return to profitability shortly, Reilly said.

GM has already agreed to contribute 1.9 billion euros of U.S. taxpayer funding to keep Opel afloat.

Read more: http://www.autonews.com/article/20100616/ANE/306169974/1193#ixzz0r1U4uOFQ

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GM WITHDRAWS EUROPEAN AID REQUESTS

By Drew Johnson

Following Germany’s rejection of General Motors’ aid request for Opel, the Detroit-based automaker has decided to withdraw all applications for European loan guarantees. GM says its funding requirements for Opel/Vauxhall have not changed, but will now rely on internal funding to complete the company’s turnaround plan.

“We appreciate the support indicated by certain governments, especially the UK and Spain, but we need to move on,” said Nick Reilly, President of GM Europe and Chairman of the Management Board of Opel/Vauxhall. “The decision of the German government last week was disappointing and means that the conclusion of these guarantees is again likely to be months away.”

He added: “To be clear, our funding needs have not changed and we were led to believe that loan guarantees made available to other European companies under the EU program to help offset the impact of the global economic crisis, would be equally available to Opel/Vauxhall. But, after a very long process defined by governments, this has turned out not to be the case.”

GM had already secured about €645 million from governments in the UK and Spain, but was well short of its €1.8 billion restructuring goal. GM’s press release stated the company’s “recently improved financial strength” was a major factor in the decision. GM posted a $900 million profit during the first quarter.

link:

http://www.leftlanenews.com/gm-withdraws-european-aid-requests.html

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GM's Opel withdraws European aid applications

Christine Tierney / The Detroit News

General Motors Co. will take $4 billion out of its own funds to restructure its Adam Opel GmbH carmaker in Germany and has withdrawn its requests for help from European governments.

GM's decision, announced today, comes a week after Germany's federal government turned down GM's application for more than $1.2 billion in loan guarantees.

"There have been no material alterations in the funding requirements of Opel-Vauxhall," GM said in a statement.

"The validity and reasons for requesting government guarantees have also not changed, but the process has proven to be much more complex and longer than anticipated. ... In these circumstances, and given the need to progress the plan quickly, it has been decided to fund the requirements internally."

GM added that its own "recently improved financial strength has also been a catalyst for making this decision." The U.S. automaker recently returned to profit, earning $865 million in the first quarter.

GM Europe President Nick Reilly thanked the governments of Britain, Spain and some German states that were prepared to offer help to pay for Opel's restructuring.

"The decision of the German government last week was disappointing and means that the conclusion of these guarantees is again likely to be months away," Reilly said. "We cannot afford to have uncertain funding plans and new time-consuming complex negotiations at this time when we need to keep investing in new products and technologies.

"With these new products and the impact of restructuring, we expect to return to profitability shortly."

GM had sought $2.2 billion in loan guarantees from Europe governments and had been prepared to cover the remaining expenses for Opel, based in Ruesselsheim, near Frankfurt. The carmaker also had concluded a cost-saving accord with Opel employees.

GM has spent months trying to line up the financing for a restructuring of Opel after reversing a plan to sell Opel to a consortium led by Magna International Inc. late last year. Germany had been prepared to back that deal financially but its government was taken aback by GM's decision not to go ahead. Opel plays an important role in GM's global vehicle development program.

"It's better for Opel that we're part of GM, and it's better for GM that it's got Opel," Reilly told reporters. He said the money for Opel's restructuring would come out of GM's overall liquidity -- a mix of the company's own cash and borrowings which are "in one large pot."

Opel and its British brand Vauxhall employ around 48,000 people in Europe, roughly half of them in Germany.

From The Detroit News: http://www.detnews.com/article/20100616/AUTO01/6160384/1148/auto01/GM-s-Opel-withdraws-European-aid-applications#ixzz0r2NmOQdr

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GM formally withdraws all Opel-related loan requests, vows to finance alone

by Zach Bowman (RSS feed) on Jun 16th 2010 at 1:01PM

General Motors has just announced that it will no longer pursue government aid for its Opel and Vauxhall brands. The reason? Neither company's financial situation has exactly changed since The General first began asking for loans from the EU a few months back, but GM simply says it can't wait for certain governments to get their ducks in a row. Evidently, the application process has been much more drawn out than the company originally anticipated.

We're guessing that by "certain governments," General Motors actually means Germany. The country just voted against handing out any money to either Opel or Vauxhall because General Motors seems to be doing well enough to support its children. Whether true or not, GM says it will continue to pursue other financing options to help support the two European brands.

GM originally asked European governments for a total of $2.2 billion at current conversion rates, and to date, only the UK and Spain have responded around $405 million in aid each. Hop the jump for the full press release.

[source: General Motors]

Show full PR text

Opel/Vauxhall to Withdraw All Applications for Loan Guarantees

Funding Requirements to be met internally

2010-06-16

Rüsselsheim / Detroit. General Motors and Opel/Vauxhall have decided to withdraw all applications for government loan guarantees across Europe.

There have been no material alterations in the funding requirements of Opel/Vauxhall as set out in the Viability Plan announced seven months ago. The validity and reasons for requesting government guarantees have also not changed, but the process has proven to be much more complex and longer than anticipated and the results are still not finalized or certain. In these circumstances, and given the need to progress the plan quickly, it has been decided to fund the requirements internally. GM's recently improved financial strength has also been a catalyst for making this decision.

"We appreciate the support indicated by certain governments, especially the UK and Spain, but we need to move on," said Nick Reilly, President of GM Europe and Chairman of the Management Board of Opel/Vauxhall. "The decision of the German government last week was disappointing and means that the conclusion of these guarantees is again likely to be months away. To be clear, our funding needs have not changed and we were led to believe that loan guarantees made available to other European companies under the EU program to help offset the impact of the global economic crisis, would be equally available to Opel/Vauxhall. But, after a very long process defined by governments, this has turned out not to be the case," he said. "We are grateful for the decision and support of our parent company, which will allow us to move forward with confidence in this very competitive industry. We cannot afford to have uncertain funding plans and new time-consuming complex negotiations at this time when we need to keep investing in new products and technologies. With these new products and the impact of restructuring, we expect to return to profitability shortly," Reilly added.

As part of a European-wide request, the UK government had committed guarantees for €330 million of bank loans and a similar amount had been indicated from Spain. The total amount requested from all European governments had been in the order of €1.8 billion. The German federal states have expressed a willingness last week to enter into new negotiations. Two weeks ago, Opel/Vauxhall had signed agreements with its European employee representatives for restructuring the company, labor cost savings and for commitments to product investments. These agreements are not tied to government guarantees.

Following this announcement, Opel/Vauxhall will be able to fully concentrate on the implementation of its growth plan, in particular the €11 billion investment plan into future products that was announced in February. Opel/Vauxhall products continue to be highly successful in the marketplace, with sales volume consistently beating internal expectations. The new Astra 5-Door version which was introduced at the end of last year, already registered more than 160,000 orders within 6 months – just 20,000 orders shy of the full-year target of 180,000. For the new Meriva, Opel/Vauxhall received 30,000 orders within just a few weeks. The company continues to be on track for the launch of seven new products this year and another five next year, including the revolutionary new Opel/Vauxhall Ampera.

link:

http://www.autoblog.com/2010/06/16/gm-formally-withdraws-all-opel-related-loan-requests-vows-to-fi/

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Gm should similarly withdraw from Germany and move operations to Poland, Spain, and England.

No more tax euros for Germany.... so sad

Do not be shocked if over the next few years there is less of GM based in Germany. You know GM, someone is going to pay..

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aldw    4

Do not be shocked if over the next few years there is less of GM based in Germany. You know GM, someone is going to pay..

It would be nice to see Vauxhall replace Opel as payback.

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ZL-1    160
It would be nice to see Vauxhall replace Opel as payback.

I don't think that will happen. What will happen is that the eastward shift of capacity (assuming emerging countries in the East do grow more) will probably punish German plants more, unless they can create/retain significant cost advantages. In the end it will always be a cost/productivity decision rule.

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aldw    4

I don't think that will happen. What will happen is that the eastward shift of capacity (assuming emerging countries in the East do grow more) will probably punish German plants more, unless they can create/retain significant cost advantages. In the end it will always be a cost/productivity decision rule.

Another possibility that's been mentioned is Buick replacing Opel in Europe, which would make sense based on shared product.

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ZL-1    160
Another possibility that's been mentioned is Buick replacing Opel in Europe, which would make sense based on shared product.

:lol: what an amusing rumour!

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