DETROIT - General Motors Co directors narrowly opted to retain Opel instead of selling the European unit to a group led by Canada's Magna International because they believed losing it could have left a significant gap in its operations, a senior GM executive said.
John Smith, a group vice president and chief negotiator in the Opel restructuring, said GM hoped to receive the financial backing of European governments and support from the labor unions in retaining the unit.
Try as we might to fashion a deal with Magna and Sberbank that would retain a close tie with General Motors over time, there was really no guarantee that would be the outcome and that sort of leaves potentially a pretty big strategic hole for General Motors to deal with, Smith said in a conference call with reporters on Wednesday.
Smith said a GM restructuring plan for Opel was expected to be completed very soon and would be similar to those developed by potential acquirers of the unit.
Up to 10,000 job cuts are possible in the restructuring and GM is reviewing its options on plant closings, he said.
This has been a close call from the very first of the three detailed reviews with our board, Smith said.
It was a coin toss in August, it was a coin toss in September and a coin toss of a kind in November and all along the way I think our board was acquiring a better understanding of the business, he said.
GM is now capable of restructuring Opel, which has been performing ahead of plan and has a healthy cash balance, he said. GM can and will repay the bridge loan if the German government asks for it and has already begun to repay it.
About 900 million euros of the loan remained outstanding and it will repay it if requested, GM said. (Reporting by David Bailey, John Crawley; Editing by Gary Hill)