GM asks Europe for up to $4.9 billion handout

updated 11:27 a.m. ET Nov. 23, 2009

BRUSSELS - General Motors Co. on Monday asked European governments to help pay most of the $4.9 billion it needs to restructure its struggling European operations.

Nick Reilly, the CEO of GM's Adam Opel GmbH and Vauxhall units, said it would be "quite difficult" for GM to supply much of the funding because it must also bear restructuring costs in the United States and elsewhere.

"We are looking for support of any government that feels willing to be able to provide us some financing support in the medium term," he told reporters after meeting officials from EU nations where GM makes cars. "We have indicated that we will provide some of the funding."

Reilly said GM would not be influenced in deciding where to cut jobs by how much money each government might offer because "the plan that we have is already in existence."

He refused to give details of the plan to cut some 20 to 25 percent of the company's car making capacity — that will likely shed thousands of jobs. He said he first wanted to talk to workers' representatives.

"People at the plants will be the first to hear it," he said.

GM met Monday with ministers from Germany, Belgium, Britain, Spain, Sweden and Poland as well as European Union commissioners in Brussels to discuss cutbacks and aid — European nations fear that countries offering bigger subsidies could escape plant closures.

Germany's deputy economy minister Jochen Homann said there was a commitment from all countries not to make any promises before GM puts forward the restructuring plan.

The head of Belgium's Flanders region Kris Peeters said he expects the company to send that plan to governments at the end of this week.

He said the countries had also agreed to avoid any "individual reaction to GM or negotiations with GM" before they could forge a joint response at a Dec. 4 meeting.

Ahead of the meeting, Germany and Belgium rushed to the moral high ground by claiming that they did not want to join a subsidy race or see any state payments to the company linked to guarantees that it would keep jobs.

This comes after Germany earlier this year raised hackles when it offered a large bridge loan and loan guarantees if GM Europe sold the majority of its struggling European business to Canadian car parts maker Magna International Inc. and Russian lender Sberbank.

Belgium and others were angered by reports that Magna won German backing — and possible funding — because they had promised to save jobs in Germany and cut posts elsewhere, even at more efficient plants in Poland or Belgium.

GM's decision to ditch the Magna sale and hang on to the units has reawakened those fears — and caused officials to call in EU regulators as referees at the Monday meeting to discuss GM's restructuring.

EU commissioners have warned that any GM job cuts have to be made on an economic basis — and not to curry political favor. They have also told Germany that it cannot link any subsidies to a promise not to cut jobs in the country.

Britain and Poland have indicated that they are ready to support Opel operations in their countries — but have not said how much they might give. Spain says any support it gives would have to be agreed by the company and its workers.

Germany appears reluctant to offer GM the ⁈llion loan it had promised Magna — and has yet to pledge the company any more money.

German Foreign Minister Guido Westerwelle said Monday that GM should focus on protecting jobs and must repay any German loans "to the euro and cent" because the money "belongs to taxpayers and not GM."

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