Germany poised for state action on Opel if bids stay inadequate

GERMANY IS planning a state-controlled trust to take temporary control of Opel and provide bridge financing, should US parent company General Motors file for bankruptcy.

The future ownership of Opel remained unclear last night, with German ministers saying none of the bids on the table were adequate. Italy’s Fiat is competing for ownership against Magna (an Austrian-Canadian car party company) and financial investor RHJ international.

Just before Tuesday’s deadline for offers, a fourth bidder, Chinese automaker Beijing Automotive Industry, threw its hat into the ring.

“A considerable number of questions remain open – with all investors. Magna and Fiat have to make concessions in some key areas,” said federal economic minister Karl-Theodor zu Guttenberg, a participant in the Berlin talks.

“At present, we have no improvement that would allow us to say that this is more sustainable than previously.”

Mr zu Guttenberg said the priority for the German government was to limit the financial demands any rescue would place on the taxpayer.

Managers at Opel, which employs 26,000 people directly in Germany, have said the company will need a state guarantee of at least €3.3 billion if it is to keep operating.

Before it commits, Berlin is looking for guarantees from the US treasury and General Motors that they will permit a clean separation of Opel from its parent, including a return of the company’s patents.

Ahead of talks in Berlin yesterday, Magna executives said Opel could have a “great future” in alliance with their company. Magna’s main business is the manufacture of car parts, although it has begun building entire outsourced car models including the BMW X3.

“Opel was always a bit restricted, not free,” said Frank Stronach, Magna chief executive.

Meanwhile, the European Commission said yesterday it would convene a meeting of EU economy ministers “at the shortest notice” to discuss the Opel rescue strategy. The announcement followed a letter from the Belgian government expressing concern that, although Opel has plants all over Europe, Germany was dominating the search for a new owner.