New confidence

GM CEO Fritz Henderson admitted Thursday that relations with Opel workers had been strained by the drawn out negotiations over the company's future and this week's sudden u-turn. "A few things need to be cemented and repaired," he told reporters.

Henderson promised that the re-structuring plan would be swift. A new management team would be brought in to run Opel and Vauxhall "within days or weeks," he said.

During what was described as an informal meeting with reporters, Henderson said the company was confident that it would have the funds to finance the restructuring of its Opel unit now that it had discarded plans to sell a controlling interest in its European operation.

He said that GM could tap some of the $50 billion (33.6 billion euros) in aid it has received from the US government to help finance its plan to restructure its European unit.

But he said it would do so only if necessary and would try to finance the $4.5 billion (3 billion euro) restructuring with loans from European countries, money generated by Opel and by reducing royalties that Opel pays GM for use of technology.

Henderson added that GM would also be able to repay a 1.5-billion-euro bridging loan to the German government.

Providing liquidity

"We will be very shortly presenting our plan," Henderson said. "We feel confident that the plan will be financeable."

"Opel's results are better that we expected them to be," Henderson said, "Our financial position is better than it was." Henderson said GM could provide liquidity to Opel by reducing the royalties that the European unit would otherwise pay to headquarters.

The terms of GM's exit from bankruptcy in the United States after taking $50 billion in U.S. government financing also allow GM to send funding directly to Opel if needed, he said.

"We are able to run a global business. We certainly need to be prudent about it. We need to be careful about it but we can run a global business," Henderson said.

Putin lashes out

In Moscow, Russian Prime Minister Vladimir Putin condemned GM's decision. "We will have to take into account this style of dealing with partners in the future, though this scornful approach toward partners mainly affects the Europeans, not us," Putin told a cabinet meeting in Moscow.

"GM did not warn anyone, did not speak to anyone...despite all the agreements reached and documents signed. Well, I think it is a good lesson."

One of the concerns for GM about the sale of Opel to Magna had been how to keep intellectual property from spilling over to Russia, a market it hopes to crack into in the coming years.

British Business Secretary Peter Mandelson said GM's decision had created uncertainty. But he also said the decision could benefit European taxpayers, especially in Britain, Germany and Spain, and that workers at GM's Vauxhall unit in Britain would prefer to keep the same management. Vauxhall employs about 5,500 people.

Countries with GM-owned plants - Germany, Britain, Spain and Belgium - were originally expected to provide aid for the rescue of loss-making Opel.

bk/Reuters/dpa
Editor: Nathan Witkop