Thursday, November 5, 2009

GM’s restructuring plan for Opel will be similar to Magna’s

General Motors Co.’s restructuring plan for Opel now falls into place. The plan is said to be similar to what had been proposed by Magna International Inc. for the company, according to John Smith, GM’s group vice president of corporate planning and alliances, who conducted a conference call with reporters recently.

Explanations were in order since GM reversed course last Tuesday and chose to keep its European Opel/Vauxhall unit. Negotiations had been ongoing for months with Russian bank Sberbank and other Russian partners on the deal. GM asserted that an agreement would have been “complicated” to manage. GM says that this would have prevented GM’s access to key Opel technologies. Smith said that GM was hoping to have binding agreements but the deal was deemed to be “a very complicated” arrangement. He explained that without a guarantee that Opel would remain an important GM source for developing fuel-efficient technologies, GM would surely have been left with a “big hole” in its global plan. In addition, Smith said that GM is able to restructure Opel with less cost and as a result, Opel will have less debt.