UPDATE: GM Will Retain Opel Product Access After Sale - CFO
02 Juni 2009 - 7:01PM
Dow Jones News
A senior General Motors Corp. (GM) executive said Tuesday that
the company's global technology center will remain in Europe, even
after the company shed control of most of its operations there.
Chief Financial Officer Ray Young said details had still to be
worked out, and GM will work with Magna International Inc. (MGA) on
the structure of the Opel/Vauxhall divisions.
Magna won German government backing to take control of the Opel
business alongside two Russian partners, with GM retaining a
minority stake.
Aside from production, Opel has a key role in GM's global
product design, though Young said most of its focus right now was
on products for the European market.
"We anticipate the [European] engineering center will continue
to play a major role for us globally," said Young during a
conference call with analysts, adding that U.S. product launches
will be unaffected by the sale.
The auto maker's moves in the last decade to meld its global
operations and ensure vehicles made around the world share common
platforms and technologies have complicated its efforts to break
off Opel.
GM's European unit has been important to the company's global
product development, including heavily influencing designs of GM
vehicles sold in the U.S.
"Clearly, collaboration [with Magna] will be essential," Young
said.
He said GM and Magna will work together on a new structure for
the Opel unit, which is being held in trusteeship and separate from
the parent's U.S. bankruptcy filing.
Still unresolved, he said, are details of how GM would access
patents and intellectual property through Magna.
Executives from Opel and Magna are expected to provide further
details on the unit's structure at an employee presentation on
Wednesday.
In his remarks, Young said GM wouldn't become a public company
again before the second quarter of next year, and forecast it would
emerge from bankruptcy protection with a "very healthy" cash
balance.
He added that $14 billion is considered a healthy global cash
balance, but didn't specify its cash position when the "new GM"
emerges from bankruptcy.
Near-term cash burn is expected to rise because of plant
shutdowns and an increased employee buyout program.
-By Sharon Terlep, Dow Jones Newswires;
sharon.terlep@dowjones.com
(Doug Cameron and Roman Kessler contributed to this report.)