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GM chief promises cash for new-look Opel

GM said it needs ?3bn ($4.5bn) to restructure Opel.
GM said it needs ?3bn ($4.5bn) to restructure Opel.
STORY HIGHLIGHTS
  • General Motors promises more independent Opel and to support its European unit with fresh money
  • GM says it needs €3bn ($4.5bn) to restructure Opel, aims to get funding from European governments
  • German government and Opel's workforce reacted furiously last week when GM decided to retain Opel

(FT) -- General Motors has promised a more independent Opel and vowed to support its European unit with fresh money as the US carmaker tried to calm the fury sparked by last week's decision to keep the unit.

Fritz Henderson, head of GM, spoke after a series of meetings with Opel's management and works council at the German carmaker's Rüsselsheim headquarters.

He said the US carmaker would provide a "reasonable and sizeable" portion of the restructuring costs for Opel and Vauxhall, rather than seek 100 per cent government aid.

GM said it needed €3bn ($4.5bn) to restructure Opel and aimed to get some of this funding from several European governments. A person close to GM said "roadshows" with those governments would start next week.

Angela Merkel, the German chancellor, urged GM to quickly present a restructuring plan to the government and said Germany would only give aid if the US carmaker would pay the biggest chunk of the restructuring.

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"This solution can only work if GM takes over the lion's share of the restructuring costs, which also means that it has to pay back the bridging loan," she said.

Mr Henderson said GM had already paid parts of the €800m sum outstanding from the bridge loan granted by the German government this summer to keep Opel afloat. GM planned to pay the remainder before the end of the month and "at least part, if not all of it" would come out of the US, Mr Henderson said.

The German government and Opel's workforce reacted furiously last week when GM decided to retain Opel. Both had strongly supported a plan to sell the carmaker to Canada's Magna and Russia's Sberbank.

Mr Henderson tried to soothe the German workforce when he said Opel would be more independent in the future.

"We do have to change the way we operate in Europe. Will this lead to more independence? I think the answer is yes," Mr Henderson said.

GM was open to expand Opel outside Europe, Mr Henderson said. "But its most important task will be to win back the European customer."

Mr Henderson refused to elaborate on GM's plans to cut about 10,000 jobs at Opel and close several plants.

Last week's decision by GM stirred further anger in Russia, where German Gref, head of Sberbank, threatened legal action against GM yesterday.

"It is still not understood why General Motors changed their decision so radically in one and a half months. [...] I hope that all these questions can be decided without legal action, but we are prepared to defend our position even in court," Mr Gref said.

His words came as GM appointed Nick Reilly, head of the carmaker's international operations, as interim head of Opel and Vauxhall. Mr Henderson said GM aimed to find a new and permanent chief executive within the next months.

He said the carmaker was looking for a "strong European leader" who was capable of operating in a pan-European landscape and who had a "sense of adventure".

© The Financial Times Limited 2009