Tense time for Vauxhall as GM Europe debate terms of short-term lending with US and German governments
Production and jobs at Vauxhall UK are under threat due to ongoing uncertainty over the fate of its parent company, General Motors Europe.
The European arm of GM, the world’s second biggest carmaker, needs urgent bridging finance to maintain operations while the company agrees terms of a buy-out with one of three bidders. On Thursday morning the Financial Times reported that the US government had asked for a further Eu300m to finance the period of production of both Opel and Vauxhall while a bidder was secured.
The FT says: “Berlin blamed GM and the US Treasury for the failed attempt to secure a state-backed bail-out and said Opel, the core of GM’s European operations, would become insolvent if a deal was not struck by Friday night.”
Vauxhall in the UK employs about 5,500 people between two sites at Ellesmere Port and Luton. Lord Peter Mandelson has said the Government will offer its support to Vauxhall to keep jobs at both plants. The offer is not a guarantee but contingent on the outcome of short-term financing for GM Europe being thrashed out in Germany, the decision on which is imminent. The UK government has so far not received a request from the German government for any support for Vauxhall. A spokesperson for the Department of Business Enterprise and Regulatory Reform (BERR) told The Manufacturer there is no deadline on the bridging finance but that a decision was likely to be made in the next 48 hours.
The fate of GM Europe rests between three bidders for the car company – Italy’s Fiat, Canadian car parts manufacturer Magna and Ripplewood Holding, a private equity company based in Austria.
It has been widely speculated that General Motors, the US parent company which operates separately to GM Europe, will need to file for Chapter 11 bankruptcy protection, given the collapse of demand for cars and its debt position, despite the scale of its government bail-out package. A Chapter 11 bankruptcy filing mandates that no foreign company operated by the parent is affected by the filing.