THE GERMAN government is increasing pressure on General Motors (GM) to announce the sale of its European subsidiary, Opel, to a Russian-Austrian consortium by this afternoon, or risk losing a state loan worth €4.5 billion.
The GM board is meeting in Detroit this morning to analyse offers for Opel, two months after signing a letter of intent to sell the company to the consortium headed by Austrian carparts company Magna.
After detailed talks with Magna ran into difficulties, GM began looking at other offers.
Before its brief bankruptcy, which left GM managed by the US government, Opel was shielded from its parent company in a special trust. That has left a 65 per cent stake of the European subsidiary managed by the Berlin federal government and the German federal states in which Opel operates.
Berlin has made a €1.5 billion loan available to cover Opel’s day-to-day operating costs.
Now it is offering a so-called “Golden Bridge” loan for GM to close a deal with Magna, Berlin’s preferred bidder.
After making an offer to GM of €4.5 billion credit, with contributions from other countries where Opel has factories, Berlin has offered to come up with the cash on its own – although at an interest rate of 10 per cent.
German chancellor Angela Merkel and economics minister Karl-Theodor zu Guttenberg are anxious to have a deal finalised quickly to allow them to reap the political benefit ahead of the German general election on September 27th. Mr zu Guttenberg said yesterday he expected a “decision in principle” after today’s meeting in Detroit.
Following rushed talks in Berlin in June, this morning’s meeting is the first time representatives of the Magna consortium, backed by Russia’s state-owned Sberbank, have been invited to present their takeover proposals.
While the Magna plan involves job cuts – up to 10,000 across Europe – Berlin politicians favour it because, among other things, it keeps German job losses to a minimum. The state support for the Magna plan is backed by unions and Germany’s 50,000 Opel workers. The fact that the parts company is a known quantity in the industry has helped overcome some unease at the involvement of the Russian state-controlled bank.
According to press reports yesterday, Berlin has urged Magna executives to secure further loan guarantees from the Russian government of prime minister Vladimir Putin to help seal the deal.
Since its preliminary agreement with Magna in June, GM has been eyeing a proposal from Brussels-based investment group RHJ International. Its deal, requiring €3.5 billion in state aid, is attractive to Detroit for reportedly allowing the troubled car company the option of buying back Opel in better times.
