Thursday May 28, 03:46 AM
Germany holds high-stakes Opel meeting
By Simon Sturdee
BERLIN, (AFP) - German Chancellor Angela Merkel convened a high-stakes meeting in Berlin to discuss the fate of Opel as parent company General Motors (NYSE: GM - news) careened closer to bankruptcy.
Germany, where GM has its largest operations in Europe, has been presented with three formal offers to buy a stake in Opel: a Russian-backed bid from Canada's Magna, from Italy's Fiat (Milan: F.MI - news) and from Brussels-based RHJ International (Brussels: RHJI.BR - news) .
GM and Washington will ultimately decide which offer to accept but Berlin is prepared to offer billions of euros (dollars) in loan guarantees.
Berlin had previously intended to choose which offer it preferred on Wednesday night but a few hours earlier it scaled back its ambitions, saying the bids needed to be improved.
"What is more likely is that after this evening's talks with all parties, future talks... will be continued with at least two potential investors," Merkel's spokesman Thomas Steg said.
Steg said that Berlin expected "progress" on other issues including on Germany's plan to put Opel in a trust in order to keep the firm operating with the help of a 1.5-billion-euro (2.1-billion-dollar) government loan.
This model was given a boost on Wednesday by Opel's announcement that GM had transferred to it control of GM's European factories and its patents, allowing the firm still to operate in the event of a bankruptcy of the US giant.
The marathon meeting was continuing at 0130 GMT Thursday with sources saying no firm decisions were imminent as Germany reaffirmed its commitment to Opel.
"If GM goes bankrupt, we don't want the lights going out at Opel," Vice-Chancellor Frank-Walter Steinmeier told reporters before the start of the Berlin meeting, which included a representative from the US government.
Economy Minister Karl-Theodor zu Guttenberg warned that an insolvency of the German carmaker remained an option if the United States refused to back the trusteeship model.
"Both Fiat and Magna have improved their offers. This is good but they have to be better," said Juergen Ruettgers, state premier of North Rhine-Westphalia, where Opel employs 5,000 people at its Bochum plant.
The German government came under pressure from other European countries on Wednesday, with Britain and Belgium pressing Berlin not to strike a deal that would protect German workers at the expense of GM Europe workers elsewhere.
GM employs 55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab (Stockholm: SAABB.ST - news) , 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.
The European Commission called for a meeting of European finance and industry ministers on the issue "as soon as possible."
GM's bankruptcy was looking increasingly likely, meanwhile, with its announcement that it had failed to convince enough of its bondholders to accept a crucial deal that was a key element in its restructuring plans.
GM is widely expected to throw in the towel ahead of a June 1 deadline imposed by President Barack Obama's government, which has provided the automaker with billions of dollars in emergency loans.
Of the three offers for Opel, Canadian car parts maker Magna is seen as having the best chance of winning German approval, with unions and centre-left Social Democrat members of the governing coalition backing it.
It has teamed up with Russia's top bank, state-controlled Sberbank, for a bid that would see precious metals tycoon Oleg Deripaska's truck company GAZ making Opel vehicles in Russia.
Fiat wants to combine General Motors' European and Latin American operations with Chrysler (Xetra: 710000 - news) , in which it has secured a 20-percent stake, to create the world's second largest automaker after Toyota of Japan.
The Italian firm's chairman Luca Cordero di Montezemolo had called Germany's selection process a "lottery." Its Chrysler deal was being scrutinised by a US court on Wednesday.
Brussels-based RHJ International, the third bidder, owns stakes in auto parts firms including Niles and Asahi in Japan, Belgium's Honsel, as well as in Columbia Music Entertainment.
A fourth bidder -- China's Beijing Automotive Industry Corporation (BAIC) -- has also emerged, the German government confirmed on Wednesday.
Steg said the Chinese bid had come too late for them to have a place at the table for tonight's talks but did not rule out negotiations with BAIC at a later date.
-- Dow Jones Newswires contributed to this story --
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