Money Matters, Simplified.
GM to disclose Opel's fortune today
by Kimberly Reid - September 10, 2009 - comments
According to Reuters that cited unnamed sources familiar with the proceedings, GM has sent its chief Opel negotiator, John Smith, to Berlin to brief the trust supervising Opel and German government officials
New York, September 10 -- General Motors (GM) is set to announce the fate of its Opel unit today. The company’s board of directors is reviewing all outcomes, including the possibility of retaining the unit or selling it to one of two rival bidders.
In July, GM had emerged from 40 days of bankruptcy protection with a plan to sell its struggling unit. Last month, the company failed to choose between the Magna and RHJ, the companies bidding for Opel, leading top speculations that GM will not sell the unit.
Finally, GM will end suspense over the fortune of its European arm.
"General Motors' board of directors approved a course of action for its Opel subsidiary and will be communicating its recommendation to the German government, other European governments, both bidders, employees and the Opel trust board over the next 24 hours," GM stated.
Decision awaited
GM has sent its chief Opel negotiator John Smith to Berlin to brief the trust supervising Opel and German government officials, according to Reuters that cited unnamed sources familiar with the proceedings.
The trust has been set up to prevent the European carmaker, Opel, from sliding into bankruptcy. It comprises two members each from GM and government and will take the final decision on who will take over Opel.
Some sources close to the negotiation said that GM will reject the bids and take control of Opel.
Government in favor of Magna bid
Chancellor Angela Merkel has favored Magna's bid for Opel because the deal will preserve more jobs. The government has promised GM 4.5 billion euros in government guarantees, if the company accepts Magna’s offer.
Even the workers at Opel are planning mass protest if GM rejects Magna's bid.
"We will then tomorrow with many thousands of people go to Eisenach ... and will symbolically protect the factory from access with a chain of people," Klaus Franz said on German television station ZDF.
But the GM’s management is in favor of RHJ, which according to GM is more likely to reorganize Opel. RHJ is planning to cut down on production to return the unit to profitability.
If the deal gets through, one of the bidders will take over 27.5 percent of the company, Opel employees would keep 10 percent, and GM will retain 35 percent.