Friday May 29, 10:07 AM
German, US officials push for Opel breakthrough
By Simon Sturdee
BERLIN (AFP) - German and US officials were to launch a fresh push on Friday to clinch a rescue deal for General Motors (NYSE: GM - news) ' European units Opel and Vauxhall as Italy's Fiat (Milan: F.MI - news) refused to improve on its offer to buy a stake.
Marathon talks that lasted all night earlier this week ended in acrimony after Germany said the US side arrived with an 11th-hour request for 300 million euros (416 million dollars) more in loans from the German government.
Finance Minister Peer Steinbrueck slammed the US negotiating tactics as "scandalous" and Economy Minister Karl-Theodor zu Guttenberg said the talks were "at times absurd."
Opel's powerful works council described the breakdown in talks as a "bitter setback" and accused GM of treating Opel as a "chip in the poker game of their own insolvency."
The United States rebuffed the charges. "We believe it was a constructive dialogue," a US government official told reporters by telephone in Washington, speaking on condition of anonymity.
"We would strongly resist the notion that the US government was either uninterested... or trying to make any last-minute math. None of that is true."
The negotiators are racing against a June 1 deadline set by US President Barack Obama's administration for General Motors to come up with a rescue plan or be forced to follow rival Chrysler (Xetra: 710000 - news) into bankruptcy.
In a key development on Wednesday, GM transferred assets and patents to Opel in a bid to keep them safe in the event of a GM bankruptcy.
And in a dramatic move on Thursday, a proposed bankruptcy reorganisation plan was unveiled, which would give the US government a 72.5 percent stake in GM, a regulatory filing showed.
Friday's talks in Berlin were set to choose between two bids to acquire a stake in GM's European operations, which include Opel in Germany and Vauxhall in Britain.
They were also about creating a trusteeship model that would keep Opel operating in the event of a GM bankruptcy with the help of a 1.5-billion-euro government loan.
After an offer from Brussels-based RHJ International (Brussels: RHJI.BR - news) was shunned late Wednesday, the race became a contest between Italy's Fiat and Canadian auto parts maker Magna International, which is backed by Russian interests.
But on Friday Fiat said it could not improve its offer and would not attend the talks.
"We have already offered to contribute our auto business assets to the merger on a debt-free basis and thus provide substantial, and absolutely necessary, equity to the merger," Fiat boss Sergio Marchionne said in a statement, adding: "More cannot be asked."
Fiat negotiators will therefore not attend the meeting because its "sole topic" will be emergency funding for Opel.
"It is in fact unreasonable to expect, on the basis of prudent business judgment and proper governance of its affairs, that Fiat would provide funds to an organisation whose financial details and position remain unknown to date," the statement said.
Chancellor Angela Merkel is under pressure from all sides to find a way to break the deadlock, with some 25,000 German jobs at stake just four months before a national election.
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.
Although the final decision on the fate of GM's European operations lies with Detroit (DETROIT.SN - news) and Washington, Germany has a key role to play as it will provide billions of euros in loan guarantees to a suitable bidder.
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