GM details commitments to Opel unions, China’s SAIC

DETROIT (BestGrowthStock) – General Motors Co has reached a deal in principle with union leaders representing its workers in Europe on investment in new vehicles over the next four years and agreed to pay a penalty of over 1 billion euros ($1.28 billion) if it fails to reach those targets.

The disclosure was included in GM’s quarterly filing with U.S. securities regulators and came a day before the top U.S. automaker was expected to file a registration for an initial public offering of stock.

GM’s European operations remain a weak link for a company that was turned around in bankruptcy in 2009 with $50 billion in U.S. government funding.

Late last year, in a move spearheaded by Chairman Ed Whitacre and incoming Chief Executive Dan Akerson, GM scrapped plans to sell off its Opel unit to auto supplier Magna in a deal that had the backing of Germany’s government.

GM said in June it would raise the 3.3 billion euros needed to restructure Opel without government financing in Europe.

In the quarterly filing with the U.S. Securities and Exchange Commission, GM said it had reached a tentative agreement with European union representatives and expected to have a final deal by the end of September.

Under the terms of the tentative deal, GM agreed to pay Opel workers up to 265 million euros for each year in the 2011 to 2014 window that it fails to meet its commitment to spend on investment in new products and jobs, GM said.

“Management has the intent and believes it has the ability to meet the requirements under the agreement,” GM said in a discussion of risks for its operations expected to detail many of the same issues it will raise in its IPO registration.

GM also said that its China joint venture partner SAIC had helped it secure a $400 million line of credit from a commercial bank earlier this year. In that deal from February, SAIC took a 51-percent stake in what had been a 50-50 joint venture in a crucial market for GM.

GM said in its filing with the SEC, GM said that SAIC would purchase the ownership share in Shanghai General Motors that was pledged as collateral for the $400 million bank loan if GM ever defaulted on the $400 million loan.

(Reporting by Kevin Krolicki; editing by Bernard Orr)

GM details commitments to Opel unions, China’s SAIC