Germany will not help GM in restructuring of Opel

November 12, 2009 http://detnews.com/article/20091112/BIZ/911120353

Germany will not help GM in restructuring of Opel

Automaker denied financial resources to restructure unit and must repay bridge loans

STAFF AND WIRE REPORTS

A senior German government official told General Motors Co. executives Wednesday that the U.S. automaker will have to cover the cost of restructuring its troubled German carmaker Adam Opel GmbH.

Economy Minister Rainer Bruederle said he reiterated the position outlined by Chancellor Angela Merkel at a meeting in Berlin with Nick Reilly, GM’s head of international operations, and John Smith, the chief negotiator in the Opel bid talks.

Merkel told the lower house of Parliament on Tuesday that GM would have to rely on its own resources to restructure Opel.

"This solution can only work if GM takes over the lion’s share of the restructuring costs, which also means that it has to pay back the bridging loan," she said.

GM Chief Executive Fritz Henderson also was in Germany this week to speak with Opel executives and labor representatives following the U.S. automaker’s unexpected decision last week to keep Opel.

GM previously negotiated a deal to sell a majority stake of Opel to Canada’s Magna International Inc., a plan favored by the German government.

It provided GM with $2 billion in bridge loans, which GM is ready to repay, and offered more than $6 billion in credit guarantees to help finance the Magna-led deal.

European Union Competition Commissioner Neelie Kroes raised doubts about the deal when she questioned whether the terms of Germany’s financing offer constituted undue pressure on GM to accept the Magna deal.

After a board meeting last Tuesday, GM said it would retain Opel — prompting a testy response from Germany, even though officials said the aid was not tied to the Magna offer.

On Sunday, Bruederle told ZDF Television that it wasn’t clear whether GM could deliver a sustainable plan for Opel quickly. "I’m also very skeptical whether the company, which handled this so badly, has new ideas overnight," he said.

GM estimates it needs $4.5 billion to restructure Opel — less than the sums tallied by bidders for Opel — and Henderson has said other countries with Opel factories might help with loans.

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