GM: We'll foot the bill for Opel ourselves

by Peter Valdes-Dapena, senior writer


NEW YORK (CNNMoney.com) -- General Motors has withdrawn requests for loan guarantees from various European governments to help restructure its Opel division there. Instead, GM said, it will invest the necessary funds itself.

GM Europe had requested a total of €1.8 billion, or $2.2 billion, from countries where it has operations including Germany, where Opel is headquartered, Spain and the United Kingdom.

2009_opel_insignia.03.jpg
The 2009 Opel Insignia is also sold in China and the U.S. under the Buick brand name. In the U.S., it's sold as the Buick Regal.

Last week, the German government denied GM's request for €1.1 billion, or $1.4 billion, to help finance the restructuring.

The UK and Spain had each already committed to back some bank loans, GM said, but those requests have now been withdrawn.

GM had originally agreed to contribute €1.9 billion ($2.3 billion) to Opel's restructuring, but will now commit a total of €3.3 billion, or about $4 billion.

GM had submitted its requests for the government loan guarantees six months ago, said Nick Reilly, president of GM Europe, on a conference call. The process took much longer than Opel executives had anticipated, he said.

"In that period of time, the GM financial position has improved somewhat and the outlook is positive," he said.

In May, GM announced a quarterly profit of $865 million. GM had previously said it did not have any more money to invest in Opel's restructuring.

The funds for GM's investment will come from "a mix of our own cash and borrowings," Reilly said.

While some may object to GM stepping in where the German government wouldn't, considering that the carmaker was only recently bailed out by the U.S. government, it's in GM's best interests to fund the restructuring, said Reilly.

"The U.S. government is a 61% holder of GM," Reilly said. "One very important part of GM is its European operations."

GM had also said that it would invest €11 billion ($13.5 billion) in new product development for Opel over the next five years, and said in its announcement that it willl maintain that commitment.

Opel, which also includes the British Vauxhall brand, plans to cut approximately 8,300 jobs in Europe as part of the planned restructuring. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Find Your Next Car
Index Last Change % Change
Dow 16,880.36 -31.75 -0.19%
Nasdaq 4,462.90 0.00 0.00%
S&P 500 1,970.07 0.12 0.01%
Treasuries 2.55 0.09 3.74%
Data as of 12:39am ET
Company Price Change % Change
Bank of America Corp... 15.58 0.24 1.56%
Genworth Financial I... 13.98 -2.28 -14.02%
Facebook Inc 74.68 0.97 1.31%
Pfizer Inc 29.26 -0.21 -0.71%
Apple Inc 98.15 -0.23 -0.23%
Data as of Jul 30

Sections

The case involves bad mortgages sold by Countrywide Financial ahead of the Great Recession and its multi-billion dollar rescue by Bank of America. More

The case involves bad mortgages sold by Countrywide Financial ahead of the Great Recession and its multi-billion dollar rescue by Bank of America. More

Restrictive immigration policies prevent talented entrepreneurs from launching businesses in the U.S. So, they're moving to Canada. More

The Mason family, which has been struggling to pay the $100,000 student loan bill they were left with when their daughter passed away five years ago, is now seeing an outpouring of support. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.