30 May 2009
May 28 (Bloomberg) -- General Motors Corp. didn't ask for additional funding for its Opel unit from the German government, Chief Executive Officer Fritz Henderson said.GM's request for a 1.5 billion-euro ($2.1 billion) so- called bridging loan remains unchanged, Henderson said in an interview today. The Detroit-based carmaker wants 450 million euros in upfront payment, while the German government had thought the immediate needs were 100 million euros, he said.
"Any confusion that was caused by this we take responsibility for," Henderson said. "We're trying to find common ground in Europe in what is clearly a tense situation."
Negotiators in Berlin working through the night failed to agree on the rescue of Germany-based Opel after the U.S. automaker demanded at least 300 million euros more in cash, according to German Economy Minister Karl-Theodor zu Guttenberg. Negotiations will resume tomorrow at 4 p.m., Finance Minister Peer Steinbrueck said.
GM, facing a potential bankruptcy filing, asked for immediate cash assistance from the German government to keep Opel operating. Chancellor Angela Merkel, seeking re-election on Sept. 27, is under pressure from lawmakers and labor unions to save 25,000 Opel jobs in Germany.
Talks at Merkel's offices, which included members of her cabinet and state-level officials, a U.S. Treasury representative and corporate executives, narrowed the bidders to Fiat SpA and Magna International Inc. While a solution may be reached by tomorrow, the plan could fail, Guttenberg said.
‘Bizarre Night'
"This was a bizarre night," Guttenberg told reporters at 4:30 a.m. "The talks were turned upside down by GM's unexpected demands. We do not have the assurances we need in order to extend a bridge loan."
Guttenberg said today he regretted that the U.S. side hadn't adopted a more serious approach or been prepared to compromise.
"We had a nasty surprise when this demand turned up literally at 8 p.m.," an hour before the talks started last night, Steinbrueck said. "We did consider this a bit of an outrage."
An offer from buyout firm RHJ International SA was "dismissed," Steinbrueck said. Turin, Italy-based Fiat and Magna, with its headquarters in Aurora, Ontario, have "equal chances" to buy Opel, though insolvency for the unit still remains an option, Guttenberg said.
Sberbank Backing
Magna Chairman Frank Stronach, backed by Russian lender OAO Sberbank, said his company may be willing to advance the cash sought by GM as long as Germany agrees "to help us recover the money" in the event of Opel's bankruptcy.
Magna is serious about its offer and would regard an insolvency of the unit as "irresponsible," Stronach said today in an interview with Bloomberg Television, pledging to provide short-term financing should doing so make economic sense. Steinbrueck called Magna's proposal "very attractive."
The Canadian company's plan foresees a partnership with Russian carmaker OAO GAZ and as much as 5 billion euros in state aid, as well as Opel workers taking a 10 percent stake in the reorganized carmaker. Magna and Sberbank plan to invest as much as 700 million euros.
Irina Kibina, a spokeswoman Sberbank, declined to comment when contacted by Bloomberg News. GAZ Deputy Chief Executive Officer Elena Matveyeva wasn't immediately available to comment.
Global Reorganization
Germany went into the talks with the goal of reaching an agreement with U.S. and GM officials to place Opel in a trust that would receive 1.5 billion euros in government loans. Germany won't increase that sum, said Roland Koch, the state premier of Hesse, where Opel is based.
GM is selling Opel as part of a global reorganization that the carmaker must complete by June 1 to qualify for rescue funding. Yesterday GM said its European assets such as plants, sales organizations and technology have been transferred to Adam Opel GmbH, signaling a further separation of the European operations from its U.S. parent.
Karin Kirchner, a spokeswoman at GM Europe, said in a statement today that GM "hopes to have a solution soon."
GM is responsible for the breakdown of talks, according to Rainer Einenkel, a union leader at Opel's plant in Bochum, which employs 5,300 workers.
"We need clarity of the situation very quickly, because it's about the future of plants and jobs," Einenkel said by phone. "It's irritating that GM didn't provide full information ahead of the meeting and that confirms the sense that the company is very chaotically organized."
Additional Needs
While Guttenberg said earlier today that GM's additional financing needs for Opel are 300 million euros, at a separate meeting, Steinbrueck pegged the figure at 350 million euros. Stefan Olbermann, a spokesman for Steinbrueck, said that GM estimated $500 million last night as the additional needs, while the 300 million-euro figure was also used by the company.
Opel, founded in 1862 by Adam Opel, started out making sewing machines and bicycles before going on to produce cars, including its "Laubfrosch," or tree frog, model. GM purchased 80 percent of Opel in 1929. Two years later, GM bought the rest of Opel, establishing itself as the biggest carmaker in Europe through the 1930s.
GM is trying to protect its European operations, including Germany-based Opel, before a U.S. government-imposed June 1 deadline to restructure or file for bankruptcy, Henderson said. GM is also taking "similar steps" for all its international units, he said today.
