European Union officials said Monday that decision on granting of aid to automaker General Motors Co.'s (MTLQQ.PK) Adam Opel GmbH unit will not be made until a meeting to be held in December. The European countries also agreed that no national measures should be taken without prior information and coordination with other involved countries and the European Commission, the European Union's executive arm in Brussels.
The decision was taken after executives of General Motors, or GM, convened with European officials in Brussels to request financial aid in the restructuring plan. Discussions over the fate of G.M. enterprises in Europe follow the company's decision to maintain operations there, rather than sell them as part of the automaker's restructuring in September.
GM had abandoned plans to sell its majority stake in Opel and Vauxhall to a consortium led by Canadian car-parts maker Magna International, Inc. (MGA, MG-A.TO). Magna had teamed up with Russian auto maker OAO GAZ Group and state-controlled Russian financial group OAO Sberbank for the deal.
Detroit, Michigan-based GM, which emerged from bankruptcy in July, said in early November that its board has decided to retain its European operations, citing the improving business environment as well as the brands importance to GM's global strategy. GM wants EU governments to help provide Euro 3.3 billion it says is needed to restructure Opel.
Last week, Nick Reilly, chief executive of GM's European operations, announced plans to cut 20%-25% of G.M.'s production capacity in Europe and cut about 10,000 of the 55,000 jobs as part of its planned restructuring.
At the meeting with General Motors executives on Monday, European Union officials stressed the European dimension of the problem and the common interest to ensure long-term viability for the European subsidiaries of GM and sustainable jobs for the employees, while insisting on the primary responsibility of GM itself.
In a statement, the European Union said, "It was agreed that any financial support by one or more Member States should be based strictly on objective and economic criteria, and not include non-commercial conditions concerning the location of investments and/or the geographic distribution of restructuring measures. This is essential to avoid subsidy races between Member States and the fragmentation of the Single Market."
The representatives of the companies attending the meeting, Britain, Spain, Poland, Belgium, Sweden and Germany, all with G.M. plants, have agreed to discuss aid only if G.M. presents a definitive restructuring plan. Opel said it will inform unions this week about its restructuring plan. Representatives from the EU governments will meet December 4 to discuss the issue.
MTLQQ.PK closed Monday's trading at $0.669, up $0.029 or 4.53% on a volume of 1.99 million shares.
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