RHJ sweetens offer for GM's Opel

[September 02, 2009]  WIESBADEN, Germany (AP) -- RHJ International SA said Wednesday it has improved its offer for General Motors Co.'s Opel unit, saying it would put more cash into the automaker and seek lower loan guarantees from Germany's government.

Arnaud Denis, a spokesman for the Brussels-based company, told The Associated Press that RHJ would provide euro300 million ($429.4 million) in cash compared to euro275 million offered earlier and expects loan guarantees of euro3.2 billion from the government, down from euro3.8 billion.

"We are still in the race," Denis said of the ongoing process to resolve the future of Adam Opel GmbH, whose fate has been debated during nearly six months of sometimes intensive talks. Under the new offer, RHJ would pay back the state loans by 2013 instead of 2014.

RHJ is bidding for control of Opel, although the German government has repeatedly said it favors a bid from Canadian car parts maker Magna International Inc. and Russian state-owned bank Sberbank, which have promised not to close any of the four Opel plants in Germany.

Denis said RHJ's new offer was "the best and most compelling" but added that, ultimately, "it's now up to GM to decide."

Last month GM's board declined to choose between Magna's and RHJ's original bids, raising speculation that it might not want to sell the unit at all for fear that technology could fall into competitors' hands and GM could lose valuable engineering resources.

Opel builds popular models like the Insignia sedan, which was voted the 2009 European Car of the Year by a panel of automotive experts. Opel engineers are integral to GM's overall strategy.

The GM board is scheduled to meet again on Sept. 8 and 9, according to Germany's Economy Ministry but it's not certain if any deal could be approved then.

In an interview with Bayerischer Rundfunk television broadcast Tuesday night Chancellor Angela Merkel said she hoped that GM could clear up its remaining questions on the matter before national elections Sept. 27.

"That is at least what we are working toward," Merkel said.

Currently, Opel is being kept afloat by a euro1.5 billion government-backed bridge loan. Under the terms of the deal being discussed, Magna and Sberbank would get a 55 percent stake in Opel. GM would hold onto a 35 percent stake and Opel workers would get 10 percent.

Just ahead of GM's bankruptcy earlier this year, Opel was transferred to a government-backed trust that holds 65 percent of the automaker, with GM holding 35 percent.

The German government has offered an additional euro4.5 billion in credit to support the Magna bid.

Opel employs 25,000 people in Germany, about half of GM Europe's total work force, and German politicians have been keen to safeguard jobs ahead of national elections next month. The federal government's preference for Magna is shared by the four German state governments where Opel has plants.

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On the Net:

http://www.opel.com/

http://www.gm.com/

[Associated Press; By GUIDO RIJKHOEK]

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