The Auto Writer

General Motors will likely be filing for protection under Chapter 11 of the US bankruptcy code on Monday, but its main European operation, Opel, will already be starting down its own path to restructuring. Last night the German federal government agreed to extend Opel bridge financing of $2.1 billion which will allow Canadian auto supplier giant, Magna International, and a party of investors to acquire Opel (and Vauxhall) from General Motors.

The deal still must receive the formal approval of all four German states involved in the negotiations with some other details to be worked out. However, it appears that by early July Opel, Vauxhall and GM’s Chevrolet operation in Russia will be firmly in the hands of the Canadian based company, freeing GM to concentrate on restructuring its other core businesses.

Fiat SpA Loses Out, Gets Chrysler

Magna was in competition with Fiat SpA for control of Opel, but the latter lost out when fears that the Italian automaker would close several German automotive plants weighed in. Though a loser in the battle for Opel, Fiat will most likely be assuming control over Chrysler early next week. Fiat still has a bid in for Saab, the Swedish automaker wholly owned by General Motors, but competition for that company is stiff.

With the sale of Opel and related operations, GM Europe will be a much smaller entity offering Chevrolet, Cadillac and Corvette vehicles for the long term if parent GM Corp. is able to emerge from bankruptcy in the coming months intact. GM Europe also sells vehicles representing the Hummer and Saab brands, but both those companies are for sale and will likely be closed down or sold off before 2009 comes to an end.

The Auto Writer will be following closely GM’s pending bankruptcy and restructuring in the weeks and months ahead.

Source: Automotive News