Financial support for Vauxhall?

May 27th, 2009

The current economic climate has hit many companies, but one of the worst hit industries has been car manufacturers.

Vauxhall owner, GM Motors, is on the brink of collapse due to huge debts. They are currently trying to sell its European operations in order to restructure and renegotiate its debts before the deadline on Monday which has been set by President Obama.

Lord Mandelson, the Business Secretary, is trying to help save the Vauxhall plants in Luton and Ellesmere Port which together employ 5,000 people. He met with GM’s chief executive and management team indicating that the UK Government may be considering financial support.

If the company is not able to restructure effectively the US Goverment could emerge as the majority shareholder. The Guardian are reporting that only a small number of holders are expected to agree to swap unsecured debt for a 10 percent equity share of a recapitalized GM. If the agreement is not met (which is a requirement of President Obama) then the company could be made bankrupt.

Entry Filed under: cars