GM Units In Europe, Korea, Appeal For Aid To Stay Open

The severity of the fallout from General Motors Corp. (GM) financial difficulties became clear Friday as its Swedish received credit protection from a court and the Korean car maker GM controls confirmed it has asked a government bank for emergency aid.

Meanwhile, GM's profitable German unit Opel also said that market conditions have deteriorated and that it needs at least 3.3 billion euros in fresh capital to survive.

The European and Korean manufacturers' troubles underscore the severity of the crisis in the U.S. auto industry and its ripple effect. GM, struggling with a $29 billion debt load, is in talks with German, U.K., Swedish, Canadian and Thai governments to secure $6 billion in aid and has said planned expansion in Asia won't proceed without support from governments or other partners.

GM has already received $13.4 billion in loans from the U.S. government and this week unveiled a restructuring plan saying that it needed a total of $30 billion in aid, or $16.6 billion more than it has now. But it's not alone among car makers asking foreign governments to help their units survive the global economic turndown that has sliced car makers' sales and battered share prices world wide. Volvo Cars, a unit of Ford Motor Co. (F), at the end of January applied to the European Investment Bank, backed by Sweden, for EUR475 million, for example.

GM's Swedish car maker Saab Automobile AB received credit protection from the court, allowing it to start its reorganization. The company's CEO said it hoped the court process over three months will transform it into a functioning company that is fully independent from its struggling Detroit-based owner.

"We are now recreating Saab Automobile as an independent unit," Saab Chief Executive Jan-Ake Jonsson said in a statement after the Vanersborg District Court in southwestern Sweden approved its request to launch reorganization.

But Sweden's government maintained an arms-length approach, saying it doesn't plan any support for Saab, though it didn't rule out the possibility of guaranteeing loans that Saab has sought from the European Investment Bank.

"[Let's picture] Saab as an independent car company with ... low sales volumes," said state secretary Joran Hagglund at the Swedish Ministry of Enterprise, Energy and Communication. "If you listen to analysts, then they say there's not a chance such a company can survive. So what I'm really saying is that you should keep your expectations very low."

Saab last year sold fewer than 94,000 cars, down from about 125,000 vehicles in 2007. Its best-ever year was in 2006, when it sold 133,000 cars, making it a tiny player in the global auto industry. Saab will present its reorganization plan to creditors within three weeks, it said.

In Germany, Armin Schild, a supervisory board member at Opel, told Dow Jones Newswires Friday that the company needs at least EUR3.3 billion in capital to survive and become less dependent on GM. The company also asked for state aid in November. GM's largest European brand didn't provide financial details.

"It's the clear responsibility of Opel's management to paint a realistic picture and consider the change on European markets when asking for guarantees from the state," Opel said in a statement.

Opel's predicament was mirrored in Korea, as GM Daewoo Auto & Technology Co. confirmed that it has asked for emergency funding from state-run Korea Development Bank to help relieve its liquidity crunch. GM and GM's affiliated companies own a 72% stake in GM Daewoo, while KDB has the remaining 28%.

GM Daewoo has already reached its credit limit of 1.3 trillion won (US$865 million) from KDB and commercial banks and has KRW125 billion in loans coming due in October, a KDB official told Dow Jones Newswires, and the company confirmed. GM Daewoo owes KDB KRW1.055 trillion.

GM Daewoo confirmed the request and said it will submit formal documents for financial help from state-run banks, without giving the date.

"We are in discussions with the Korean government and KDB to secure credit lines during the current global credit market liquidity shortage in order to fund new product development plans and new plant investment projects," GM Daewoo said.

   Company Web site: www.saab.com, www.gm.com, www.volvocars.com www.gmdaewoo.co.kr 
 
   -By Ola Kinnander, Dow Jones Newswires; [phone]; [e-mail] 

(Kyong-Ae Choi in Seoul and Roman Kessler in Frankfurt contributed to this report.)