BERLIN: Germany lashed out at the United States over the breakdown of talks on the future of Opel yesterday but managed to select two final bidders for the GM unit: Italy’s Fiat and Canada’s Magna International.
The marathon negotiations were aimed at finding a suitable buyer for General Motors’ struggling European operations, with the German government willing to offer billions of euros (dollars) in loan guarantees to any potential investor.
But at the last minute, GM and the US government demanded an extra $418.26 million (300 million euros) in temporary loans from Berlin to keep Opel afloat, a tactic slammed by German Finance Minister Peer Steinbrueck as scandalous.
Fresh talks on Opel are scheduled for today.
Speaking to reporters early yesterday morning, Steinbrueck said: “We were unpleasantly surprised when this new demand came out of the blue at 8:00 p.m. local time (1800GMT). We found that pretty scandalous.”
“GM again confronted us with new figures,” said Economy Minister Karl-Theodor zu Guttenberg, adding that the US government “could have made more of an effort” with its choice of representative at the discussions.
“We have made a fresh request to the US Treasury and we expect a response before Friday,” he said, calling Washington’s input so far “marginal, to put it politely.” Declaring Opel insolvent is also still an option, said zu Guttenberg.
Roland Koch, the influential premier of the state of Hesse, where Opel’s headquarters are situated, said the Americans had not provided sufficient guarantees that Germany would get its temporary loans back.
Speaking on local radio, Koch said: “What the Americans are doing here is not acceptable. They are ignoring the situation in Europe and are trying to push through their own agenda.”
Opel’s powerful works council described the breakdown in talks as a “bitter setback” and accused GM as treating Opel as a “chip in the poker game of their own insolvency.”
“Europe is not a gamblers’ casino,” the council said.
In a key development on Wednesday, GM transferred assets and patents to Opel in a bid to keep them safe in the event of a GM bankruptcy.
In another development, General Motors pulled back from the brink yesterday, winning US government and bondholder support for a new restructuring plan.
GM, kept afloat so far with $19 billion in US taxpayer money, had been facing a deadline on Monday to come up with an agreed reorganization and looked to be in serious trouble when bondholders balked earlier this week.
But yesterday, it said a new plan, this time endorsed by bondholders, would see the government hold a 72.5 percent stake in return for possibly more than $50 billion of fresh funding.
The Treasury Department “has indicated to GM that if GM decides to seek relief under the US Bankruptcy Code and seek bankruptcy court approval for the sale of substantially all of its assets... a new company sponsored by the US Treasury (New GM) would agree to acquire such assets,” it said.
In Germany, two bidders, Italian car giant Fiat and Canadian auto parts maker Magna International, remained in the race after a third bidder, Brussels-based investment firm RHJ International pulled out during the talks.
Magna’s offer, backed by Russia’s state-owned bank Sberbank, is still seen as the front runner, with unions and center-left Social Democrat members of the governing coalition backing it. The Canadian firm has also promised to come up with the 300 million in additional funds, a move welcomed by German authorities.
For its part, Fiat wants to combine General Motors’ European and Latin American operations with Chrysler, in which it has secured a 20-percent stake, to create the world’s second largest automaker after Japan’s Toyota.
Chancellor Angela Merkel is under pressure from all sides to find a way to break the deadlock, with some 25,000 German jobs at stake just four months before the country goes to the polls.
Berlin has also come under fire from other European countries with Britain and Belgium pressing Germany not to protect their workers at the expense of employees elsewhere.
GM employs 55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab, 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.
Although the final decision on the fate of GM’s European operations lies with Detroit and Washington, Germany has a key role to play as it is stumping up a good deal of the cash to keep the factories going. Governments of European member states that have Opel plants are following the talks closely because they want to save jobs.
The European Commission has called a meeting of European trade and economy ministers for today to discuss the future of carmaker Opel and its plants in Europe, a spokesman said.
The meeting is scheduled to take place in Brussels at 3 p.m. (1300 GMT). Industry ministers from all of the bloc’s 27 member states have been invited, a spokesman for EU Industry Commissioner Guenter Verheugen said on Thursday. He gave no further details of the talks.
Chrysler case
Chrysler yesterday spent a second day fighting for court approval of a bankruptcy plan aimed at saving the failed US auto giant.
Judge Arthur Gonzalez, at the US Bankruptcy Court in New York, was expected to rule either last night or today on whether to approve the sale of Chrysler to investors led by Italy’s Fiat.
Chrysler CEO Robert Nardelli was among witnesses expected to be questioned on the second day of the marathon court hearing.
