General Motors Co. provided Adam Opel GmbH with 650 million euros ($935 million) in fresh funding, more than doubling investments in the unprofitable European division since abandoning a sale two months ago.
The funds, provided on Jan. 4, are intended to help Opel "until more permanent financing sources can be obtained,"Detroit-based GM said today in a Securities and Exchange Commission filing. Opel said separately that it plans to suspend production in coming weeks because of declining sales.
The financing includes early payments to Ruesselsheim, Germany-based Opel under engineering agreements with GM, the carmaker said. The payments would normally have been made in April and July, it said.
GM extended 600 million euros to Opel in November to repay a short-term German-government loan that kept Opel in business while the U.S. parent company was under protection from creditors. GM decided to keep Opel in early November, backing out of an agreement to sell the division to a group led by Canadian auto-parts maker Magna International Inc.
The U.S. manufacturer is in talks with European governments about receiving 2.7 billion euros in aid to finance Opel's restructuring. As part of the reorganization, GM is considering eliminating 8,300 jobs and closing a plant in Antwerp, Belgium. Opel is also negotiating with unions on securing 265 million euros in annual savings from workers.
Management Shift
GM completed a management overhaul today at Opel, which also owns the Vauxhall brand in the U.K.
"We will very quickly take the next steps in moving Opel and Vauxhall forward," Nick Reilly, president of GM Europe and new managing director of Opel, said today in a statement to employees.
European auto markets are likely to shrink this year after sales in 2009 were helped by programs such as Germany's 5 billion-euro rebate encouraging the trade-in and scrapping of cars older than nine years. J.D. Power & Associates forecasts a 10.5 percent decline in car sales in Western Europe in 2010.
Opel plans to reduce hours for about 12,000 German production workers because of weak auto markets in Europe, said Andreas Kroemer, a spokesman.
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