On-the-Brink GM Separating From Opel
GM spinning off its German arm in case of bankruptcy.
May 27, 2009— -- Ailing General Motors and its German subsidiary Adam Opel GmbH are moving toward financial and legal separation, General Motors Europe said today.
"The move means that all European factories, dealerships and GM values have been handed over to [German-based] Adam Opel GmbH in order to shield the units from a potential GM bankruptcy," the company said in a statement released by Joerg Schrott, head of General Motors Europe corporate communications.
The announcement comes ahead of today's top-level meetings in Berlin about the future of the beleaguered German carmaker Opel, as well as its sister brand Vauxhall, in Britain.
The automaker, which employs about 25,000 people in Germany, nearly half of GM Europe's total work force, has been hit hard by the global financial crisis. Car sales have been plummeting and the company, struggling for survival, has been searching for investors in order to avoid filing for insolvency.
The German government, keen to save as many jobs as possible, has pledged financial support to potential investors.
Four bids for Adam Opel GmbH are on the table: Italy's Fiat, Canadian auto parts maker Magna International Inc., U.S. investment firm Ripplewood Holdings LLC and, as a last-minute contender, Chinese carmaker Beijing Automotive Industry Holding CO (BAIC).
Although the ultimate choice of an investor still lies with General Motors and, therefore, the U.S. government, the German government is expected to decide later today whether and how to lend state support to the one selected.
Finance Minister Peer Steinbrueck told ARD in Berlin this morning that Germany could provide any new investor in General Motor's subsidiary Adam Opel GmbH with $2.09 billion in bridge financing to keep the company running after an investor was found.
The finance minister spoke ahead of top-level meetings of German lawmakers and U.S. officials getting together in Berlin to decide on the future of Opel.
Steinbrueck added that any investor would likely be looking also for middle-term support from the government.
