Friday May 29, 09:54 PM
Germany mulls new Opel takeover plan
By Richard Carter
BERLIN (AFP) - A deal to secure the future of General Motors (NYSE: GM - news) in Europe and tens of thousands of jobs by selling a part of its Opel unit to Canadian car parts maker Magna hung precariously in the balance on Friday.
An eleventh-hour takeover proposal thrashed out by GM and Magna was being studied at a crunch summit meeting in Berlin between top German politicians, representatives of the US government and the two firms.
Sources told AFP that there had been some "progress" in the negotiations but senior politicians downplayed the chances of a swift final agreement.
Although the decision on the fate of GM's European operations rests with Washington and GM itself, Berlin plays a key role as Opel employs 25,000 workers and the German government will have to stump up billions of euros (dollars) in loan guarantees.
"There are new plans from Magna who are negotiating with GM," Economy Minister Karl-Theodor zu Guttenberg told reporters as he went into the meeting.
"We will have to examine them at the same time."
But zu Guttenberg played down the prospects of clinching a deal on Friday, saying: "It is not yet certain that we will come to a decision today... those that believe we will have a solution in one or two hours are wrong."
Foreign Minister Frank-Walter Steinmeier, who is also vice chancellor, also stressed that a definitive deal could yet be a long way off.
"The situation has still not been solved. All parties need to be conscious of their responsibilities and I remain confident that a solution can be found," said Steinmeier, adding that saving Opel was "anything but simple."
Britain's Business Secretary Peter Mandelson, who is not involved in the meetings, told the BBC it was "pretty likely" that Magna would clinch a deal to snap up GM's European operations, which include Vauxhall in Britain.
Magna 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.
It has been seen as the front runner in the race to win Opel from the beginning, winning the support both of unions and centre-left Social Democrat members of the governing coalition.
And its chances were boosted considerably earlier Friday as its last remaining rival -- Italian car maker Fiat (Milan: F.MI - news) -- dramatically pulled out of the talks at the last minute.
Fiat said it would not expose itself to "unnecessary and unwarranted risks" and that it had insufficient information on Opel.
"It is in fact unreasonable to expect... that Fiat would provide funds to an organisation whose financial details and position remain unknown to date," it said in a statement.
An earlier round of all-night talks collapsed acrimoniously on Thursday, with Berlin accusing GM and the US government of moving the goalposts at the last minute and using "scandalous" negotiating tactics.
GM suddenly demanded some 300 million euros (423 million dollars) more than expected in temporary bridging loans, on top of the 1.5 billion euros Berlin has already said it would provide.
The German government stressed earlier Friday it would not go beyond this 1.5 billion figure. "This is non-negotiable," government spokesman Thomas Steg told a regular briefing.
Berlin is also set to provide around 4.5 billion euros in loan guarantees if Magna wins the deal.
Chancellor Angela Merkel is under pressure from all sides to find a solution for Opel, with some 25,000 German jobs at stake just four months before a national election.
However, she is also wary of not being seen to throw away taxpayers' money.
She has not ruled out insolvency for Opel but said in an interview with Spiegel magazine's online edition that her government "was making every effort to find another way."
Merkel added: "A direct government stake in Opel is out of the question for me."
Friday's talks in Berlin were also meant to be about creating a trusteeship model that would keep Opel operating in the event of a GM bankruptcy.
GM employs about 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.
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