M&A

23 November, 2009

UPDATE 1-GM to present plan to fix Opel this week

* GM to show blueprint for Opel as it bids for state help

* Interim Opel boss says carmaker needs 3.3 billion euros

* Original aid bid unravelled after GM backed out of sale

(Adds background, detail, Reilly comments)

BRUSSELS, Nov 23 (Reuters) - General Motors [GM.UL] will present a plan to European governments to save struggling carmaker Opel within days, a rescue set to cost 3.3 billion euros ($4.9 billion), those involved in talks said on Monday.

General Motors this month backtracked on plans to sell Opel to a consortium led by Canadian car parts manufacturer Magna (MGa.TO), but needs government aid to keep Opel in business.

Opel interim Chief Executive Nick Reilly travelled to Brussels on Monday to meet officials including German Deputy Economy Minister Jochen Homann and Kris Peeters, the premier of Flanders, a Belgian region where Opel has a plant.

The meeting was also attended by European Union Competition Commissioner Neelie Kroes, whose blessing is needed before any state can give financial aid.

Coming out of talks, Peeters said General Motors would present a restructuring plan for Opel to European governments by the end of the week and that European officials would then discuss it and possible aid on December 4.

GM's Reilly had earlier put a cost of 3.3 billion euros on the rescue.

"We have indicated that we will inject some GM funds into into that requirement too," he said.

"That is quite difficult because we are also going through a restructuring of our U.S. operations and other parts of the world, but we have indicated that we will provide some of the funding."

Reilly would not say how much state aid Opel would need.

"I should emphasise that the plan that we have is already in existence and will not be influenced by any particular government giving particular money," he said.

Reilly said GM intended first to disclose details of its plan to workers and has set up meetings with works councils later this week.

Opel has struggled as global demand slumps while competition in the overcrowded car market remains cut-throat, the same problems that pushed parent General Motors into bankruptcy.

GM's core businesses have been stripped out and moved into a holding company, where they are unburdened by debt. ((Reporting by Philip Blenkinsop, Marine Hass and John O'Donnell, +32 2 287 6817 or +32 473 92 48 90; john.odonnell@thomsonreuters.com)) ($1=.6679 Euro)

Source: http://www.reuters.com