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December 7, 2009

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GM still seeks German funds to revamp Opel

THE new president of GM Europe said on Saturday he was still hoping for German government financial help to restructure Opel, but added that even if Berlin fails to come through it will not mean more layoffs in the country.

Nick Reilly, who was named president of GM Europe last Friday after previously serving as president of GM International Operations, said in a conference call that Adam Opel GmbH was not going to be able to come up with the 3.3 billion euros (US$4.97 billion) it needs on its own.

"There is a belief out there that GM has sufficient money in the US that it can spend in Europe," Reilly said according to a transcript of the call. "That is not the case."

The remarks come after German Economy Minister Rainer Bruederle last Friday was critical of GM, saying that the company only wants to put 20 percent of its own money toward the restructuring costs and that he thought GM "has a lot of resources."

Opel and its sister Vauxhall employ some 48,000 people in Europe, more than 24,000 of them in Germany.

GM shocked European governments and employees last month by abruptly canceling the planned sale of a majority in Opel to a consortium of Canadian auto parts maker Magna International Inc and Russian lender Sberbank.

Germany now appears reluctant to offer GM the huge loans it had promised Magna - and has yet to pledge the firm any more money.

Reilly said GM has applied to the German government for funds.

"They were willing to support the Magna deal, so we expect some support for our plan ..." he said. "But regardless, the German government decision will not lead to more or fewer layoffs in Germany. The expectation is that we will get financial support from most European governments. We would be disappointed if Germany is the only country which does not participate."

Of the 3.3 billion euros, Reilly said 1 billion euros would be for restructuring while the rest would go primarily toward investments in new products.


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