September 9, 2009 / 10:24 PM / 10 years ago

WRAPUP 1-GM board shakes up management, moves on Opel

* GM Opel negotiator heads to Berlin to meet trust-sources

* Announcement on Opel readied for Thursday-sources

* GM CFO to leave in shakeup of management-source

By Kevin Krolicki and Christiaan Hetzner

DETROIT/FRANKFURT, Sept 9 (Reuters) - General Motors Co [GM.UL] shook up its management and dispatched a negotiator on the sale of its Opel unit to Berlin after a watershed two-day board meeting under the direction of Chairman Ed Whitacre, people familiar with the proceedings said.

GM’s 13-member board endorsed the departure of GM’s chief financial officer, a new marketing campaign aimed at winning back skeptical U.S. consumers and a still-sealed decision on Opel that will be conveyed to German officials on Thursday, the sources said.

As part of the board review, GM Chief Financial Officer Ray Young, 47, will leave the automaker after an 18-month stint that included a failed effort to keep its U.S. operations out of bankruptcy, according to the sources, who were not authorized to discuss the board action.

Meanwhile, John Smith, the GM executive who has headed months of negotiations with the German government and two potential bidders for GM’s Opel unit, was on his way to Berlin, the sources said.

Smith will brief representatives of the German trust supervising Opel and German government officials before news conferences scheduled for Thursday in Germany, the sources said.

It was not immediately clear what action the GM board had taken on Opel after spending the past month weighing the merits of selling the European unit against the cost of keeping it.

A group led by Canadian auto group Magna International MGa.TO has a promise for the financial backing of the German government to take control of Opel.

Brussels-listed RHJ International RHJI.BR has a rival bid that GM management has said would be easier to implement.

On Monday, financial adviser KPMG presented a report to GM’s board that said the automaker’s management had used “overly optimistic” assumptions when it prepared an earlier estimate of the cost of keeping Opel.

German labor and government officials ratcheted up the pressure on GM to take some action at this week’s board meeting after the board deferred a decision last month.

Magna Chairman Frank Stronach said earlier on Wednesday in Cologne that he expected a GM decision on whether it would move ahead with a deal to sell Opel within the next few days or weeks.

Magna remained interested in Opel and would not try to buy other automakers if its bid for Opel fell through, he said. [ID:nL9237596]

The German government said earlier in the day that it expected GM to repay a 1.5 billion euro ($2.2 billion) state loan if the automaker called off the sale of its Opel unit.

KPMG said GM would need up to $6.1 billion in cash to keep Opel, more than the $4.65 billion it had estimated as late as June, according to a copy of the report presented to the board at the meeting in Detroit.

Opel’s fate has become a hot-button political issue in Germany ahead of elections looming at the end of the month since some 25,000 jobs in Germany depend on the GM unit.

The meeting of GM’s board in Detroit was the second time that directors have met in person after the automaker emerged from bankruptcy with $50 billion in U.S. government financing in July.

Reporting by Philipp Halstrick in Frankfurt, Christiaan Hetzner and Angelika Gruber in Cologne, Kevin Krolicki and Soyoung Kim in Detroit; Editing by Phil Berlowitz, Leslie Gevirtz

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