Opel race narrows to two but still no funding deal
Written on May 28, 2009
As the battle for German carmaker Opel narrowed to a two-way race between Fiat and Magna, overnight talks to shield Opel from parent General Motors’ looming bankruptcy ended with no deal.
GM on Wednesday failed to win approval for a crucial bond exchange proposal, moving it closer to filing the largest bankruptcy ever for a U.S. industrial company.
German ministers, emerging in the early hours of Thursday morning after more than 12 hours of talks, said they had been unable to reach a deal to provide Opel with temporary financing if GM files for bankruptcy, and put the blame for the failure squarely on GM and the U.S. Treasury.
“We have made demands on the U.S. Treasury and expect answers by Friday, and we will need these answers in order to agree a plan,” Economy Minister Karl-Theodor zu Guttenberg said.
“We don’t have the security yet that we need to commit to bridge financing today.”
There was still a risk that Opel would not get state guarantees, he said.
In an interview on ARD television, Guttenberg said “the behavior of those responsible at General Motors, not only in Detroit but also in Europe, unfortunately, certainly leaves much to be desired.”
Finance Minister Peer Steinbrueck spoke of “surprises and disappointment” with the U.S. negotiators, saying GM had shocked participants by announcing it needed 300 million euros ($415 million) more in short-term cash bad credit payday loan.
GM Europe had no immediate comment on the outcome of the talks, but its head Carl-Peter Forster told a German magazine last week that Opel and GM Europe’s Vauxhall operations in Britain had enough liquidity to last into the third quarter.
FIAT, MAGNA BATTLE
Italian carmaker Fiat and Canadian-Austrian auto parts supplier Magna both remained in the race to buy Opel, the ministers said, while Belgium-listed holding RHJ International SA was out of the running. China’s Beijing Automotive Industry Corp could return with a more detailed offer.
“I think we are now in overtime. And many games are decided in overtime,” said Opel supervisory board member and regional IG Metall union boss Armin Schild, who did not take part in the talks, in a Deutschlandfunk radio interview.
“But there is no guarantee that the future of Opel is secured if the trustee model is not standing, and if an understanding is not reached between GM and investors,” added Schild.
German and Italian newspapers reported on Thursday that an EU meeting of countries with Opel plants would be held on Friday.
Fiat has presented an ambitious plan to fold Opel and other GM Europe brands Vauxhall and Saab into a transatlantic car empire that would also include new U.S. partner Chrysler.
Filed in: legal.