M&A

23 November, 2009

UPDATE 2-GM to present plan to fix Opel this week

* To show blueprint as it bids for state help

* Interim Opel boss says carmaker needs 3.3 billion euros

* Previous aid deal unravelled after GM backed out of sale

(Adds background, detail, Reilly comment)

By Philip Blenkinsop and John O'Donnell

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.

GM this month backtracked on plans to sell Opel to a consortium led by carparts firm Magna (MGa.TO) -- a deal that involved government aid -- but is now turning again to European states for help 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, as well as the bloc's industry commissioner, Guenter Verheugen.

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 discuss possible aid on Dec. 4.

GM's Reilly earlier put a cost of 3.3 billion euros on the rescue, saying: "We have indicated that we will inject some GM funds into into that requirement too.

"That is quite difficult because we are also going through a restructuring of our U.S. operations and other parts of the world," he said.

On Monday, the EU's industry commissioner said that without state aid, the plan could not work.

"General Motors made one point very clear, 100 percent clear, the restructuring plan could only be achieved when European member states with Opel plants give some financial help," said Verheugen.

"So the plan works only with state aid. The idea that General Motors can finance this on its own was not shared by General Motors, this possibility does unfortunately not exist."

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

Opel has struggled with slumping global demand as 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. It had nearly $43 billion in cash in September after emerging from bankruptcy in July thanks to a $50 billion package that made the United States a 61 percent owner. (Additional reporting by Marine Hass; Editing by David Cowell) ((Contact John O'Donnell on +32 2 287 6817 or +32 473 92 48 90; john.odonnell@thomsonreuters.com)) ($1=.6679 Euro)

Source: http://www.reuters.com