GM to restructure Opel, scraps sale to Magna
By TIM HIGGINS
FREE PRESS BUSINESS WRITER
General Motors board of directors today decided to scrap plans to sell the automaker’s German Opel division to Canadian auto supplier Magna and its Russian partner Sberbank.
Instead, the Detroit automaker plans to restructure the European division at a cost of about 3 billion euros, which the company said was “significantly lower” than all of the bids submitted earlier this year by potential investors.
“GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration,” Fritz Henderson, GM president and CEO, said in a statement. “We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employees, suppliers, and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”
GM, since emerging from bankruptcy in the United States in July, has been undergoing a sweeping restructuring of its North American operations.
GM’s efforts to sell Opel hit a snag in October when the European Union questioned Germany’s plans to help Magna and Sberbank acquire the GM division.
The final deal was announced in September after a summer of tough negotiations.
Henderson said GM’s overall financial health and stability has improved in recent months.
“While strained, the business environment in Europe has improved.” Henderson said. “At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured. "
Tom Wilkinson, a GM spokesman, said the company was not in a position to publicly detail the financing of Opel’s restructuring “at this point.”
“However, the plan is to secure the bulk of financing from European loan guarantees,” he said in an e-mail.