Commentaries

GM blog lifts hood on power struggle over Opel

By Paul Taylor
July 31, 2009

cfcd208495d565ef66e7dff9f98764da.jpgIt’s not often you get to lift the hood and watch a power struggle going on in the engine room of General Motors. But the vice-president of GM Europe, John Smith, has just provided tantilising details of the arguments over the rival bids for Opel/Vauxhall, the main European arm of the fallen U.S. auto giant. Smith is the chief negotiator on the sale of Opel.

Magna sweetens Opel bid, but not on GM concerns

By Paul Taylor
July 28, 2009

Canadian-Austrian car parts maker Magna has sweetened its offer for General Motors’ main European arm, Opel, by pledging more of its own capital up-front as it tries to burn off Belgium-based financial investor RHJ International, which has GM’s favour so far. But the improved bid doesn’t appear to address the U.S. auto maker’s main concerns about future control. 

GM dumps Chinese in Opel race, standoff looms

By Paul Taylor
July 23, 2009

Two things Opel junkies need to know in today’s news.

1) General Motors has dumped Chinese state-owned carmaker BAIC’s long-shot bid to take over GM’s main European arm. That leaves a two-horse race between Canadian-Austrian car parts maker Magna and Belgium-based financial investor RHJ, loosely associated with U.S. private equity firm Ripplewood.

Politics, economics collide over Opel

By Paul Taylor
July 20, 2009

Political and economic logic are set to collide in the byzantine decision-making over the future of German carmaker Opel, the main European arm of fallen U.S. auto giant General Motors.
If politics prevail, as seems likely, the cost to German taxpayers will be higher and the chances of commercial success lower.

Bankruptcy-related M&A at 5-year high – more to come?

July 10, 2009

This week’s Thomson Reuters Investment Banking Scorecard shows bankruptcy-related M&A at a five year high.

GM drives route 363, bondholders beware

July 10, 2009

     The rough justice meted out to General Motors bondholders may have short-circuited the bankruptcy process, but it has damaged the confidence that holders of other debt can have in their right to fair treatment.
    There will be a long-term cost, both to borrowers and lenders as a result. Key to this has been the use — by both GM and Chrysler – of section 363 of Chapter 11 of the U.S. bankruptcy code. By invoking the “emergency” need to restructure the companies, this section has allowed the automakers to speed through the sale of the viable parts of the businesses to new companies and leave the debt behind.
    While route 363 by-passes lengthy court hearings, its use to sell prime assets drives straight through the spirit of the code, which was meant to allow companies going through a Chapter 11 to jettison non-core assets quickly as part of a longer and wider reorganisation. It was not designed to cream off the best ones.
    Lawyers are already invoking the Chrysler and GM examples to try and get round long-established rules for reorganisations.
    The result would be to deprive bond investors of their rights in a company restructuring.
    GM bondholders who would normally have enjoyed preferred credit status in a Chapter 11 were railroaded by the Obama administration into giving the quick-fire sale the go-ahead, on the grounds that this was a one-off.
    From GM’s point of view, the process has worked well, allowing the business to emerge only 40 days after filing for bankruptcy. The cost of the turnaround has been $50 billion in emergency government financing. The longer-term cost in the much bigger market for corporate debt may be far larger.

Dead stock rallying

July 9, 2009

General Motors is about to exit bankruptcy, perhaps as soon as today, selling most of its assets to a “New GM,” with the U.S. government in the driver’s seat. The legal obstacles have all been cleared. There is no hope of the shares of the old GM being worth anything more than the paper they are printed on.

Opel keeps hope alive

June 30, 2009

With General Motors in a Washington-guided bankruptcy and car makers around the world benefiting from government subsidies, politics has become firmly intertwined with the fate of the global auto industry. Even so, the deal reached in late May between General Motors and a group led by Magna International for GM’s European arm, Opel, smacked of trying too hard to come up with a politically convenient solution.

Chicken and Koenigsegg

June 15, 2009

I received something of a flaming at the hands of some readers for making a few gentle digs at the presumptions of Koenigsegg – a tiny Swedish sports car maker that is trying to buy Saab from General Motors. In particular, I was chided for not having done my homework before pronouncing – the implication being that I was too lazy to uncover the vast host of facts lying around out there in the public domain that would reveal even to a total dunderhead the merits and sense of this transaction.

Saab’s Phøenix moment?

June 12, 2009

Koenigsegg's boy racerThe great global automobile restructuring is throwing up some fairly unlikely bidders for some famous marques. Who would have thought Magna (who?) would end up buying Germany’s mighty Adam Opel? And who would have seen Fiat as Chrysler’s white knight?