Opel race narrows to two but still no funding deal

As the battle for German carmaker Opel effectively narrowed to a race between Fiat and Magna, overnight talks to shield Opel from 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."

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.

Germany was expecting more details from the U.S. by 1200 GMT (8:00 a.m. EDT) on Friday, the premier of German state Hesse, Roland Koch, said on Thursday morning.

The fate of Opel and its workforce is a hot political topic in Germany, where unemployment rose for the seventh month in a row, data showed on Thursday, and where the government is facing elections in September.

GM Europe had no immediate comment on the outcome of the talks, but a GM labor panel said GM management was responsible for the failure of the Berlin talks.

GM Europe 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.

Meanwhile Magna chairman Frank Stronach said his company was prepared to advance the 300 million euros if the government could provide some guarantee for that sum.

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 was not present at the meeting, but the option for it to return with a more detailed offer remained open.

EU industry ministers will meet on Friday to discuss the Opel sale, a spokesman for the EU executive said.

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.

Fiat CEO Sergio Marchionne was flying to the U.S. on Thursday to discuss Chrysler, a Fiat group source said.

Opel traces its roots in Germany back to the 19th century and employs about 25,000 staff in four plants there.

UK-based Vauxhall Motors, which employs 5,000 people, is being spun off from GM Europe along with Opel.

The worst economic crisis in decades is re-shaping the global auto industry, driving the weakest to the wall and hammering sales and profits across the board.

GM forecasts that Opel and Vauxhall will post an operating loss of more than $3 billion this year, the Financial Times reported, citing an offer document sent to bidders last month.

"The overnight news that the German government cannot broker a deal for Opel will send jitters round the markets," said Mark Priest, senior trader at ETX Capital in London. The DJ Stoxx European Autos Index was down 1.5 percent at 0925 GMT (5:25 a.m. EDT).

Elsewhere, global output at Japan's Toyota Motor Corp, the world's largest automaker by sales, halved in April from a year earlier, data on Thursday showed.

And adding to fears that a GM filing could cause a domino effect among suppliers, U.S. parts maker Visteon Corp filed for Chapter 11 bankruptcy protection for its U.S. operations.

GM is aiming to reduce the number of its parts suppliers to about 1,100 from 1,500 over the next year and a half, purchasing chief Bo Andersson told Reuters.

Earlier, GM said an offer to exchange $27 billion in bond debt for a 10 percent stake in a reorganized company by a midnight deadline had fallen far short of the target.

GM's U.S. rival Chrysler, already in bankruptcy, is awaiting a court decision expected to clear the way for the Fiat deal.

($1=.7232 Euro)

[Source: By Sarah Marsh and Kevin Krolicki, Reuters, Berlin and Detroit, 28May09]

Donaciones Donaciones Radio Nizkor

Informes sobre DESC
small logoThis document has been published on 11Sep09 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.