Editorial: Opel Soon Set Free?

There are growing indications that GM’s “ surgical bankruptcy” is imminent. They are already scrubbing down the surgical theaters around the world. The operation may just happen within a few weeks, and the “good brands”/”bad brands” not-so-final solution will create another mushrooming government agency that would be loath to put itself out of business. One of the many indications for rapid action: The patents tug-of-war between Opel and General Motors (or rather between the German and US governments) appears to be solved.

Bloomberg reports that “General Motors Corp. and its Adam Opel GmbH division reached an agreement on exchanging patents for debt. The accord, requiring U.S. government approval, would make up for billions of euros worth of technology that Rüsselsheim, Germany-based Opel has transferred to the parent company in previous years and protect the division in the event GM files for Chapter 11 bankruptcy in the U.S.”

The Süddeutsche Zeitung (Southern Germany Newspaper) goes into more detail. It reports that the swap became super urgent, because Opel had “sold” its patents to the mothership years ago. The invoice, however, was never paid. According to the Süddeutsche, GM is in arrears to the tune of “several billion Euro.” If GM goes C11, which the paper expects “shortly,” Opel would have to write off the receivables. Opel would have been caught both patentless and penniless and would have to close down.

The Süddeutsche says everything is cool between Opel and GM. All that is missing is a signature of the US government, which has to bless the deal. Opel management thinks that Washington will be amenable. Actually, DC should find the solution “charming” because it lowers the debt on the books of GM. Quite ominously, the usually well informed Süddeutsche adds: “Politically, Washington should have no interest in added problems concerning Opel.”

With the patent question solved, Opel can go about finding an investor. The Abwrackprämien boom and the Insignia’s success have washed fresh money into Opel’s coffers. Opel is liquid at least until August, the paper reports. “We now have time to build Opel Europe” said Klaus Franz, chief of Opel’s workers council.

Any private deal to take over Opel is likely to include some form of government help. Even with fresh money, Opel will need loan guarantees of €3.3 billion to make an engagement interesting to an investor. Both the German national government and those of the federal states in which Opel facilities are located have expressed interest in keeping the company afloat.

“How that might be accomplished is a hot-button political issue,” Deutsche Welle reports. “The Social Democrats and others have pledged that they would go so far as taking a stake in the company to rescue it from extinction. Chancellor Angela Merkel and her Christian Democratic colleagues, meanwhile, say providing preferential loans or issuing bonds is as far as they would be willing to go.”

According to Deutsche Welle, at least six investors have signaled interest in taking a stake in the company’s German-based subsidiary Opel.

“These are serious people,” GM Chief Executive Fritz Henderson said. “Many of them are financial players, some of them are industrial players. I would expect that work would get done in the next two to three weeks.” No names were named, rumors are running the gamut from sovereign wealth funds in Asia and the Gulf all the way to Fiat. Yes, Fiat. The very same that is supposedly rescuing Chrysler.

Fiat may form an alliance with General Motors’ core operations in Europe and Latin America, a source “familiar with the matter” told Automotive News on Friday. The deal would be on top of Fiat’s plan to merge with Chrysler LLC and would create the world’s second-largest auto group. No doubt with Sergio Marchionne on top. A frightening thought.

Luca di Montezemolo, the company’s chairman, quickly poured cold water on that rumor. “They’ve written about it in the newspapers? No, no,” he told reporters. As a result, “Fiat shares raced higher in relief,” writes Reuters.

In the meantime, the cutting of the umbilical cord between Opel and GM has progressed so far that even a new Opel CEO is being floated.

Reuters says that Bernd Pischetsrieder, ex-CEO of Volkswagen “could be a suitable head of a new Opel company independent of troubled US parent General Motors Corp” if an Opel dealer group in Germany gets its wish. When a new Opel company is established in Europe, it should be led by a person independent of GM, the head of German automobile retail trading group AVAG Holding AG, told Automobilwoche [sub]. AVAG is the biggest Opel dealership in Germany. Opel dealers want to participate in a rescue plan for the German car maker by taking as much as a 20 percent stake in a new company.

Pischetsrieder was chief executive of Volkswagen between 2002 and 2006. Pischetsrieder couldn’t get along with Piech, and was succeeded by Piech confidante Winterkorn. To this date, Pischetsrieder is still on VW’s payroll, but Wolfsburg would probably be happy to close that chapter also. One well placed—and obviously Winterkorn-washed—VW source said on the phone: “We wouldn’t mind Pischetsrieder in Rüsselsheim. He would make sure that Opel won’t be much of a threat.”