GM's Asia Operations to Stay in Company Fold
The Asia-Pacific operations of General Motors Corp. will stay within the company fold regardless of whether GM ends up declaring bankruptcy or not, the U.S. automaker’s regional chief said Friday.
Nick Reilly, president of GM’s Asia and Pacific business, told reporters, however, that those companies will need to be financially self-sufficient as they will be unable to access U.S. government funds.
Detroit-based GM, which has received billions of dollars in government financial support, is working on a restructuring plan and has until June 1 to avoid a possible bankruptcy filing. Chrysler LLC, the third-largest car manufacturer in the United States, filed for Chapter 11 bankruptcy protection Thursday.
Regarding General Motor’s fortunes, Reilly, also a GM group vice president, said that if the U.S. auto giant does file for bankruptcy it will likely emerge quickly from the process.
“If we have to go into Chapter 11, we anticipate it would be fast, a quick process and we would emerge out of Chapter 11 in a short period of time,” he said, likening to the situation to that of Chrysler, which expects to be in bankruptcy for between 30 to 60 days.
Reilly said that whether GM avoids bankruptcy or not, all of its units worldwide “will continue in the newly restructured General Motors” adding that the plan “includes all of the existing operations in Asia-Pacific.”
He identified those as the company’s businesses in China, Australia, Thailand, other countries in the Association of Southeast Asian nations, India and South Korea.
The administration of President Barack Obama has given GM until June 1 to come up with its own restructuring plan. The company has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.
Reilly said that since GM’s Asia-Pacific operations cannot access U.S. government support funds, they have to stand on their own.
“We have to be financially self-sufficient,” Reilly said. “And we are working hard on that in all countries around Asia-Pacific, many of whom are suffering from today’s global economic crisis.”
GM officials said last month at the Shanghai Auto Show that the company intends to keep growing in China no matter how its current financial situation is resolved. GM aims to double sales in China to about 2 million vehicles a year within the next five years, said Kevin Wale, president and managing director of the GM China Group.
Reilly also said that GM’s South Korean unit, GM Daewoo Auto & Technology Co., has reached agreement with eight banks, including state-run Korea Development Bank, to delay payment on a portion of currency hedging contracts coming due so as to avoid a potential liquidity problem in June.
He said GM Daewoo’s financial difficulty resulted from a combination of an unexpected and rapid depreciation of the South Korean won against the dollar and a dramatic drop in sales volume because of the global economic crisis.
Reilly said GM Daewoo and KDB, which is a major shareholder and its largest creditor bank, were now seeking a long-term financial solution for the company. He added that options include the bank possibly acquiring more shares. KDB currently holds about 28 percent of unlisted GM Daewoo.
5/1/2009 5:53 AM KELLY OLSEN AP Business Writer SEOUL, South Korea