Today, the president of GM Europe (the European arm of General Motors Corp. (GM)), Carl-Peter Forster, stated that GM Europe was “working hard to adapt [its] European business according to the [restructuring] plan” submitted by GM to the U.S. Treasury last month, after having requested assistance from various European governments in the past few weeks. At the Geneva Auto Show today, GM executives reportedly warned that European operations could run out of money as early as April if European governments did not provide assistance.
GM operations worldwide, including various GM operations across Europe, have faced problems due to declining auto sales and consumer confidence, as reflected in GM’s year end financial results, resulting from the broader global economic crisis. Just last week, GM’s Swedish unit, Saab Automobile AB, announced that it had filed for reorganization. Furthermore, a few days ago, GM Europe, in conjunction with its largest European operation, Germany-based Opel GmbH (Opel), submitted a viability plan to the German government, requesting a total of €3.3 billion (approximately $4.15 billion) in government support, an additional €3 billion from GM itself, and $1.2 billion in structural cost reductions. Additionally, GM Europe has welcomed the idea of “partnerships, equity positions or other alignments that will strengthen the relative position of Opel/GM,” indicating its willingness to sell a stake in Opel in exchange for government support. Finally, GM’s U.K. unit, Vauxhall, has reportedly been in talks with the U.K. government, although GM Europe released a statement denying reports that its UK-based manufacturing plants would be closed.
GM also announced today its intention to purchase the global steering parts business of its former auto-parts subsidiary, Delphi Corp., which filed for bankruptcy in 2005, through the exercise of an option under the GM/Delphi Master Restructuring Agreement. The Delphi steering operation will be operated as a stand-alone business, including employees, facilities, products, technical capability and intellectual property, and will be held as a wholly owned subsidiary of GM. Furthermore, GM stated that it would advance $450 million to support Delphi’s near-term liquidity needs, up from the previously agreed $300 million. While GM did not disclose details of the agreement, it stated that the transaction is expected to close in the second quarter of 2009. The transaction and the advance commitments remain subject to final approval by GM’s Board of Directors, the U.S. Treasury and the Delphi bankruptcy court.