Berlin pressures General Motors over Opel deal

AFP - [email protected] • 20 Aug, 2009 Updated Thu 20 Aug 2009 15:23 CEST
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Germany upped the pressure on US auto giant General Motors on Thursday to sell its European unit Opel to Berlin's preferred bidder, setting the stage for a potential transatlantic showdown.

German Chancellor Angela Merkel's government wants GM, which emerged from bankruptcy last month and is now majority owned by the US government, to choose an offer from Canadian parts maker Magna, backed by a state-owned Russian bank.

But GM's board is widely believed to prefer an offer from Brussels-based investment group RHJ International as the Detroit behemoth believes it might be able to buy it back from RHJ in better times.

And the clock is ticking: German Economy Minister Karl-Theodor zu Guttenberg said on Wednesday that he expected GM's board to make a "decision in principle" on Opel late on Thursday or Friday.

The Frankfurter Allgemeine Zeitung (FAZ) daily newspaper, reported on Thursday that this would come on Friday morning US time – afternoon time in Berlin – and that this decision would go under the spotlight in Germany next week.

In order to speed the process up, the head of the German government's "Opel Task Force" has written to GM negotiator John Smith offering a €4.5-billion ($6.4-billion) loan, he told the FAZ.

Previously, the plan was for Germany to stump up the loan together with other European countries where Opel has factories, but the Task Force's Jochen Homann said that Berlin has decided to go it alone for now.

"We have offered GM for us to cover the whole sum," Homann, who is also a state secretary in the economy ministry, told the FAZ.

Germany is willing to go it alone because around half of GM's 50,000 workers in Europe are employed in the country, but Britain, Spain, Poland and Belgium will still be expected to stump up cash at a later stage, the FAZ said.

The loan is not cheap, however – it carries a 10.5% interest rate, the paper noted. Germany has already provided €1.5 billion in short-term loans to enable Opel to cover its day-to-day operating costs.

The FAZ also reported that Homann has written to Magna boss Siegfried Wolf, calling on him to secure loan guarantees from the Russian government of Prime Minister Vladimir Putin.

Both Magna and RHJ want to cut 10,000 jobs at Opel, but Merkel and the state governments where Opel has factories prefer Magna because fewer of the cuts would fall in Germany than under RHJ's proposals, the FAZ said.

The Bild, another German daily newspaper, reported meanwhile that top GM executives , including CEO Fritz Henderson, would meet on Thursday in Detroit with Wolf, as well as with Sberbank chief German Gref.



AFP 2009/08/20 15:23

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