Company News

UPDATE 1-GM CEO starts Opel charm tour at Ruesselsheim HQ

* Henderson addresses management at Opel HQ

* GM exec responsible for restructuring Opel to join visit

* Moody’s says GM’s restructuring cost estimates are way off

* German economy minister says Opel aid not on the agenda

(Adds Moody’s on GM restructuring, Econ Min comments)

By Christiaan Hetzner

FRANKFURT, Nov 9 (Reuters) - General Motors CEO Fritz Henderson began his bid to win Germany over to his decision to keep the Opel unit, with government cash for its restructuring, while some said it wasn’t budgeting nearly enough for the job.

Berlin, which had brokered a deal for Canada's Magna MGa.TO to buy the unit and save as many German jobs as possible, has assured the European Commission that it would offer aid to Opel whoever owned it, but Germany's liberal Economics Minister, Rainer Bruederle, cooled such expectations.

He said on Sunday that GM did not currently satisfy the criteria for aid and repeated that position on Monday. [ID:nL8272301]

GM [GM.UL] has said it needs about 3 billion euros ($4.5 billion) to restructure Opel, which it trumpeted as “significantly lower than all bids submitted” in the Opel sale process, including Magna’s request for 4.5 billion euros in state aid.

Credit rating agency Moody’s, however, pinned the total funding requirement for Opel at $8.5 billion, nearly twice GM’s publicly stated figure.

“The question remains, how will GM fund Opel? We do not think that the company’s liquidity position -- including the resources available from the U.S. Treasury -- are sufficient,” it wrote on Monday.

GM’s abrupt U-turn on Opel, which torpedoed months of negotiations, infuriated German political leaders and Opel staff, who had lobbied heavily for greater self-determination in the face of GM’s bankruptcy and $50 billion taxpayer bailout this year.

Emotions are running high among the 25,000 workers in Germany, who had hoped Magna would breathe new life into Opel, and had agreed to cost savings as part of the abortive deal.

Moody’s believes Henderson will have to thrash out a deal with Berlin that includes amendments to GM’s initial viability plan, which entailed three plant closures including Bochum and Eisenach in Germany.

“The company will have to make considerable efforts to rebuild bridges with the German government and the unions, both of whom have been extremely angered by GM’s reversal on Opel,” Moody’s wrote.


On Tuesday Henderson is expected to meet Opel labour leader Klaus Franz, who wants greater autonomy for Opel as a precondition for talks on any staff and wage cuts. Later in the afternoon he meets the chairman of Opel’s European dealer body Euroda.

Bruederle said he had no meeting scheduled with Henderson.

Henderson, who held meetings with key members of management in Opel’s Ruesselsheim headquarters on Monday, was expected to bring along Nick Reilly, a Briton in charge of restructuring Opel until a replacement is found for the outgoing head of Opel Europe, Carl-Peter Forster.

As head of GM’s international operations based in Shanghai, Reilly chairs rival GM unit Daewoo, which many in Germany believe has grown in Europe at Opel’s expense by exporting cheap Korean-made Chevys.

Opel staff want GM to rebuild trust by committing to long-term investment in new models and powertrains, developing a concrete plan to market Opels outside Europe and Russia, and installing a European boss who understands what car buyers here want and can lobby successfully for it in Detroit.

Speculation is running high about who will replace Forster, who is leaving after criticising the board for reversing its decision to sell Opel. A source at GM said candidates for the job include Magna’s Chief Operating Officer Herbert Demel. (Reporting by Christiaan Hetzner; editing by Karen Foster/Will Waterman) ($1=.6678 Euro)