GM to inject $2.7B into Opel

March 2, 2010 http://detnews.com/article/20100302/AUTO01/3020395

GM to inject $2.7B into Opel

THE DETROIT NEWS

General Motors Co. will contribute 1.9 billion euros, or $2.7 billion, in financing for its struggling German carmaker Adam Opel GmbH — more than three times its previous investment pledge, Opel said today.

With this contribution, GM will provide just more than half of the funding of Opel’s estimated requirements of $5.2 billion. Nick Reilly, CEO of Opel and its British operations, Vauxhall, said GM’s contribution would be in the form of equity and loans.

Opel/Vauxhall had estimated its funding requirements at 3.3 billion euros, or $4.6 billion. However, governments had estimated it would need around $600 million more to offset deteriorating market conditions.

GM is now reducing the loan guarantees it is seeking from European governments with Opel operations by nearly a third, to 2 billion euros, or $2.8 billion.

After deciding to keep Opel last year, and ruffling the German government, which had previously offered aid, GM has had to arrange new sources of financing for the Ruesselsheim, Germany-based carmaker.

"GM’s 1.9 billion euro commitment is the right course of action for Opel/Vauxhall and should clearly signal our determination to fix our business," Reilly said. "Our call for the additional funding was approved by GM’s senior management and supported by the GM board of directors.

"We have shared this decision with the European Commission, as well as the national and state governments involved. We hope that our strong commitment will be well received as a major milestone in our ongoing discussions about government guarantees to cover the remaining gap."

"It is of vital importance for GM to demonstrate our commitment for our European operations," Ed Whitacre, GM chairman and CEO, said in a statement.

"Beyond the purely financial aspects, we see this as a major step towards instilling renewed trust and confidence into Opel/Vauxhall’s customers, employees, business partners, unions, dealers and European governments."

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