Germany Blames U.S. After Opel Rescue Talks Collapse

May 28, 2009
Two bidders, Fiat and Magna International, remain in race

Germany lashed out at the U.S. over the breakdown of talks on the future of Opel on May 28 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 in loan guarantees to any potential investor. But at the last minute, GM and the U.S. government demanded an extra 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 May 29 ahead of a June 1 deadline set by President Barack Obama's administration for General Motors to come up with a rescue plan or be forced into bankruptcy like Chrysler before it.

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."

In a key development on May 27, GM transferred assets and patents to Opel in a bid to keep them safe in the event of a GM bankruptcy.

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 centre-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% stake, to create the world's second largest automaker after Japan's Toyota.

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.

Copyright Agence France-Presse, 2009

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