By on January 15, 2010

Rich uncle in America. Picture courtesy

GM sent Opel “an additional $930m in temporary aid until more permanent financing can be found” (good luck with that,) GM disclosed in a filing with the SEC. The total financing GM has provided to Opel now stands at $1.83 b, writes the DetN. It’s not that GM sent the money out of the kindness of their hearts.

The $930m million includes “the acceleration of certain payments owed under engineering services agreements,” the filing says. In other words: GM finally pays some outstanding bills. For more than a year, it had been mentioned off and on that GM owes Opel anywhere between  €1b and €2b for services rendered. That would be $1.43b to $2.86b.

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11 Comments on “GM Makes Cash-Infusion To Opel. Kindof...”

  • avatar
    Cammy Corrigan

    The generosity of the North American bailout, knows no bounds! I hope some of that money comes to the UK.

  • avatar

    This thing just drags on and on. GM shoulda just sold it to Fiat or Magna or whatever.

  • avatar

    Why would the title say cash infusion?  Seems like to me if they are paying bills, that this isn’t a cash infusion.  When GM pays a supplier, would you post a similar headline?

  • avatar

    And… when they are planning to pay what they owed to Saab? I remember at some point last year, when the debt with Opel arised, a similar situation was happening at Saab.

  • avatar

    I’m saying they are paying bills. They say they provide financing. Temporary aid even. Which infers that the money has to be paid back ….
    And btw. any cash tendered is a “cash infusion.” If you buy a six-pack at the store, you make a cash infusion to the store in exchange for a beer infusion …..

    • 0 avatar

      Ok, here is the direct quote from the SEC filing.
      On January 4, 2010, in order to assist in the funding of the Opel/Vauxhall business until more permanent financing sources can be obtained, GM provided additional support 650 million Euros (930 Million US) to AOG and its subsidiaries (the “AOG Group”).  This support includes the acceleration of certain payments owed under engineering services agreements.
      Specifically, GM is pre-paying the AOG Group for certain engineering services related to engineering development work that AOG Group performs under an engineering services agreement with GM Global Technology Operations, Inc., a GM subsidiary (“GTO”).  The expenses that were paid on January 4, 2010 by GTO to the AOG Group would normally be reimbursed in April and July, 2010.  Therefore, the payment accelerations serve as a temporary funding source for the AOG Group’s operations until more permanent financing can be arranged.
      (excuse any typo’s, the PDF wouldn’t let me cut and paste).
      So, it looks like this isn’t pay bills owed, but prepaying bills.  I would call this a cash infusion since it is a prepayment.
      I would disagree on buy a six pack being a cash infusion.  Loans and investments are cash infusions.  Paying bills, not so much.  But either way, if it is a cash infusion or it isn’t, why does the headline say kind of?

  • avatar

    They saying they provide financing is bullshit. But well… we live in a world full of it.

    And to think… GM Daewoo stopped sending parts to the local GM branch because they owed around 2 thousand million $.

    I guess Opel and Saab and (fill the blank) can’t do a similar trick to main GM.

  • avatar

    That looks just like my basement.

  • avatar

    Interesting news. After reading the title, I was looking through the posting for someone named “Kindof.” Now I see it should be “Kind of.” That makes more sense.

  • avatar

    The key phrase seems to be payments under  “engineering services agreements”.  GM really doesn’t need Opel, the car maker, it needs the Opel engineering center and its IP that underlays so many platforms.  Once the payments are current, GM can separate the engineering center from Opel and own the IP.  Then they can threaten layoffs at Opel plants unless governments kick in cash to keep them afloat.  At least, that’s what I would do.  Is there any Euro law that would keep GM from prying the jewels out of their settings and leaving the scrap settings behind?

  • avatar

    To get rid of Opel, GM needs to put cash on the hood. That’s what this transfer is. No one will take this pile of crap off GM’s hands until GM (i.e. US taxpayers) pony up to make it worth the acquirer’s while.

    There are many forms of doing this. Some examples (not mutually exclusive):
    – clean up the Opel balance sheet by paying off liabilities.
    – close Opel plants, and have GM/taxpayers absorb the severence and other costs.
    – have GM maintain an equity stake, which in reality will function as a pipeline for funneling US taxpayer money to the buyers under the guise of strategically supporting GM’s investment in dazzling auto technology.

    The key to understanding the transaction (and the failure to reach a deal so far) is to understand that no buyer will put up a dime. Buyers have to be bribed to solve Washington’s political problem, and they’re waiting for the right package before they’ll help the Democrats escape the stink of failure. When they buyers get their number, they’ll play their part in this charade to make the American citizenry think an arms-length, free-market transaction has taken place.

    When the deal happens, the European governments will chip in token sums in order to grab some credit for saving jobs in Europe.

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