Just days after General Motors Corp. (GM) submitted its restructuring plan to the U.S. Treasury, several of its overseas units, including those in Sweden, Germany, the United Kingdom, Canada and Korea, have requested financial assistance from their respective governments. According to its restructuring plan, GM must obtain at least $6 billion in financial assistance from foreign governments by March 31, 2009, and reduce its European labor costs by $1.2 billion to successfully implement its plan.
Saab. Today, the Swedish Minister of Enterprise, Energy and Communication and Minister of Employment visited the headquarters of Saab Automobile AB, GM’s Swedish unit, which announced last Friday that it had filed for reorganization under a self-managed Swedish court process headed by an independent administrator, “to create a fully independent business entity that would be sustainable and suitable for investment.” Also on Friday, the Vanersborg District Court approved Saab’s reorganization request, finding that conditions exist for Saab to create short-term stability that will allow for it to develop a long-term solution for Saab. Within three weeks of the reorganization filing date, Saab must present a formal restructuring proposal to creditors, which will include plans for concentrating design, engineering and manufacturing in Sweden. Discussions at today’s meeting between Swedish government officials and Saab executives revolved around strategies to secure funding for the restructured company from both public and private sources during the three-month reorganization process, which will be necessary in order for the restructuring to succeed.
Canada. Last Friday, as a condition of previously receiving up to CDN$3 billion of Canadian aid, General Motors of Canada Limited (GM Canada) submitted a restructuring plan to the Canadian Ministry of Industry and the Ontario Ministry of Economic Development. The Ministries stated that they would evaluate GM and Chrysler’s plans for their Canadian units in the next few weeks, “to ensure that they include a long-term solution for a viable auto industry in Canada.” GM Canada’s restructuring plan contains the following key elements: (1) implementing cost reduction actions and adopting a new business model; (2) reaching agreement with the Canadian Auto Workers union to achieve legacy cost reductions and modifying wages and benefits of active workers; and (3) receiving sufficient additional financing from the Canadian and Ontario governments to sustain operations and address unsustainable legacy costs. Furthermore, the plan highlights how GM Canada will maintain its production levels, increase its competitiveness through the unveiling of new vehicle models and retain its customers, dealer network and vehicle line-up. Having stressed last December the integrated nature of the U.S. and Canadian auto industries, the Canadian and Ontario governments will likely consider the automaker’s plan submitted to the U.S. Treasury along with the Canada-specific plan to determine whether to provide GM Canada with financial assistance.
Opel. German Chancellor Angela Merkel indicated a few days ago that the German government would wait for Opel GmbH (Opel), GM’s German unit, to submit a business plan prior to considering whether it would provide Opel with state guarantees. Opel reportedly needs €3.3 billion (approximately $4.15 billion) to stay afloat through the end of 2011. Since GM submitted its plan to the U.S. Treasury, speculation has mounted, in part due to Opel’s employment of 25,000 German workers, that GM may spin-off Opel or the German government may buy a controlling stake in it.
Vauxhall. While the U.K. government previously announced an auto bailout plan, it has not specifically committed to providing any specific automaker with financial assistance. However, GM’s U.K. unit, Vauxhall, is reportedly in talks with the U.K. government regarding the implications of GM’s U.S. plan and whether financial assistance is needed by the U.K. unit.
GM Daewoo. Finally, GM’s South Korean unit, GM Daewoo Auto & Technology Co., has reportedly asked the state-run Korea Development Bank (KDB) for emergency funding in an undisclosed amount, after its funding request to South Korea’s Ministry of Knowledge Economy was turned down. KDB officials have reportedly stated that they will determine whether to offer GM Daewoo financial aid after submission and review of formal documents regarding GM Daewoo’s financial status.