No solution on GM's Opel at Berlin meeting

[May 28, 2009]  BERLIN (AP) -- All-night talks hosted by German Chancellor Angela Merkel on the future of General Motors Corp.'s Opel unit ended without decisions as new details emerged of its financial needs, the German economy minister said Thursday.

German officials had hoped to set up an arrangement under which the government could provide bridging financing for Opel while talks continue with potential investors.

However, Economy Minister Karl-Theodor zu Guttenberg said they did not succeed in doing that. During what he described as a "remarkable night," officials said GM reported extra financing needs totaling euro300 million ($418 million) in short-term cash for Opel.

Roland Koch, governor of Hesse state which hosts Opel's headquarters, was strongly critical of the way the meeting played out, saying that GM had suddenly produced new numbers while U.S. officials offered no security guarantees.

"What the Americans are doing here is not acceptable," he told Hessischer Rundfunk radio. "They are ignoring the situation in Europe and attempting to push their agenda."

But Rainer Einenkel, an Opel union leader, said he saw reason for optimism.

"It is a good signal that the sides are speaking with each other," he told ARD television. "It will definitely come to a good conclusion. We know what strength this work force has, that we build good cars, and that all are prepared to pitch in to find a solution."

There also was no decision on who might take over Opel from GM, which appeared likely to file for bankruptcy protection after bondholders balked at its plan to swap bond debt for company stock on Wednesday.

Steinbrueck said that two investors -- Italy's Fiat Group SpA and Canadian auto parts maker Magna International Inc., which submitted a bid along with Russian lender Sberbank -- remain in the running. U.S. financial investor Ripplewood Holdings LLC has bowed out.

The government, however, needs further information from GM and the U.S. Treasury Department before decisions can be made, Guttenberg said. That information is expected by Friday, he added.

At the same time, Finance Minister Peer Steinbrueck said that Fiat and Magna "have been asked by GM and the US Treasury to do their homework" on how they would handle the additional short-term cash needs and rework their concepts. The results of that also are expected on Friday, he said.

GM would choose any new investor, but Germany would decide on whether a new owner would get further government assistance, and if so what kind. Steinbrueck said the government was standing by its offer of euro1.5 billion in bridge financing.

Some 25,000 people work for Opel in Germany, nearly half of GM Europe's total work force, and national elections in September are putting pressure on politicians to find a solution that avoids as many layoffs as possible.

The ministers insisted that neither of the two investors was being favored at present, although Steinbrueck singled out Magna's willingness to take on the additional short-term cash burden.

"I was very pleased to see that Magna wants to be helpful in solving this additional cash problem, that seems very attractive," Steinbrueck said.

Merkel had brought together several of her ministers and the governors of four German states that have Opel plants with representatives of GM, the U.S. government and the bidders for a summit aimed at putting Opel on the road to safety.

Hours earlier, Opel's supervisory board approved a plan to package GM assets for a new investor by pooling GM's European plants, sales operations, patents and other assets, excluding Sweden's Saab unit, debt-free under the German-based Adam Opel GmbH subsidiary, said Karin Kirchner, a spokeswoman for GM Europe.

Kirchner said the consolidation would help keep Opel's assets separate from a bankruptcy filing by GM -- a demand by the German government to prevent its money from flowing to the U.S.

The German government has proposed putting Opel under a trustee to allow time for talks to continue with investors, and would ensure bridging financing for the carmaker in the meantime.

But after the eight-hour meeting at the chancellery Guttenberg said there was still not the "security at this point to offer bridge financing."

However, officials said they remain confident of saving Opel.

"I think that after tonight we can positively expect to reach a solution that will lead to the continuation of Opel as an auto maker," Steinbrueck said.

[Associated Press; By MELISSA EDDY]

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