UPDATE: GM:European Restructuring Plan May Take Until Mid-Year
April 02 2009 - 3:45PM
Dow Jones News
General Motors Corp. (GM) may need "more drastic" government
intervention to save its European operations should efforts to
secure help from a third-party investor fail, a person familiar
with the situation said.
The auto maker warned Thursday in a regulatory filing that its
European restructuring may not be complete until mid-year and that
the company is developing "contingency plans" in case negotiations
with investors and the German government fail.
GM's preferred course in Europe is to get government loan
guarantees that would entice a third party to invest in the
company's money-losing Opel/Vauxhall operations.
The alternative of direct government support from European
nations or the European Union would likely involve strict
stipulations, as has been the case in the U.S. where GM is
surviving on $13.4 billion in federal loans.
In Europe, GM is seeking $4 billion in negotiations being led by
the German government.
Talks in Germany are proving more difficult than anticipated
amid political opposition to government aid for GM and heightened
uncertainty after the White House this week rejected the company's
survival plan and gave it until June 1 to restructure or file for
bankruptcy.
The company believes a deal remains doable by the end of the
second quarter, when GM has said it could run out of cash, the
person familiar with the plans said. A backup plan, however, is
critical since insolvency in Europe could lead to a collapse
throughout the auto maker's global operations.
GM, in updates that came as part of a submission on Monday to
President Barack Obama's automotive task force, also said it
expects no financial support from the Swedish government unless it
can find a suitable investor for its Swedish Saab (SAAB-B.SK)
brand. GM is looking to offload the brand and is seeking court
protection from creditors similar to a U.S.-style bankruptcy.
GM said it also is talking to the Export-Import Bank of Thailand
about securing loans for operations there.
GM promised an overhaul of its money-losing European conditions
as part of a plea last month for up to $30 billion in U.S.
government loans.
The auto maker is seeking billions in aid from other regions as
it scrambles to avoid bankruptcy. The White House this week gave GM
60 days to restructure its operations and balance sheet. If those
efforts fail, the company would be forced into a government-funded
bankruptcy reorganization.
-By Sharon Terlep; 248-204-5532; sharon.terlep@dowjones.com.