General Motors’ European division announced Friday that its German subsidiary, Opel cars, will become an independent unit of the company.
Under the restructuring plan, announced by GM Europe on Friday, the company will ask for a more than $4 billion bailout from Germany and the governments of other European countries that have Opel plants, GM Europe CEO Carl-Peter Forster said at a news conference. “We are in need of capital that we hope to get with the help of the public sector of about 3.3 billion euros,” said Forster, who was speaking at Opel’s main plant in Ruesselsheim, Germany. “With this aid, we believe that we can lead this company to a very profitable future.” The plan will be presented to the German government Monday, he said. Opel would like to become fully independent of GM, but it will need taxpayer money to stay alive. Watch why Opel wants GM to remain a shareholder ยป The restructuring plan will allow Opel to maintain its own balance sheet and make its own decisions, but GM will keep a stake in the company. In a news release, GM Europe said that “Opel remains an integral and important part of GM’s global operations and will continue as such in the future.” The news was welcomed by the labor organization for Opel’s employees, who had staged recent demonstrations demanding that GM’s European brands sever their ties with the American parent company — perhaps with governments taking a stake.
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“Today we have received confirmation that after 80 years owning this company, General Motors is willing to give up some shares in Opel,” said Klaus Franz, a representative of Opel’s labor organization. Forster said the company is talking to employee representatives about “how we can prevent redundancies and closing plants.” “No decisions to close plants or cut jobs have been made. We are trying to prevent that,” Forster said. “But we do have cut costs substantially, by about $1.2 billion.” GM sells more than half its vehicles outside of North America but is facing losses in all of those markets. Saab, Opel and Vauxhall are all GM brands that employ about 55,000 people across Europe. GM reported a net loss of more than $30 billion for the last year, including a $9.6 billion net loss in the fourth quarter, a period in which its sales plunged and it needed a federal bailout to avoid filing for bankruptcy.
GM also disclosed that it burned through $6.2 billion in cash during the last three months of the year. The company ended the quarter with cash of $14 billion. If not for the $4 billion federal loan it received December 31, GM’s cash level would have fallen below the $11 billion to $14 billion in cash the company has said it needs to continue operations.
