28 May 2009

Talks on Opel 'disappointing', as GM nears bankruptcy

6:19 pm on 28 May 2009

Germany has hit out at the attitude of the US government and of General Motors over the plight of its German unit Opel after all-night talks in Berlin on saving the car maker.

Finance Minister Peer Steinbrueck says Berlin is disappointed, with "unpleasant surprises" in the discussions.

Economy Minister Karl-Theodor zu Guttenberg told reporters his government has made a fresh request to the US Treasury, and expects a response before Friday.

Mr Zu Guttenberg says GM had requested an additional 300 million euros in state aid for Opel, which employs 25,000 people in Germany.

He also says only Italy's Fiat and Canada's Magna remain in the running to buy a stake in GM Europe, which includes Opel in Germany as well as Vauxhall in Britain.

Fiat, Magna and Brussels-based RHJ International had last week filed expressions of interest with the German government, which is offering billions of euros in loan guarantees to keep the company afloat.

GM employs 55,000 people Europe-wide, including about 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab, 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.

Bond bid fails

GM said in a statement that an offer to exchange $US27 billion in bond debt for a 10% stake in a reorganised company had fallen far short of the target set in consultation with the Obama administration.

It says substantially less than the 90% threshold has been tendered and none of the exchange offers would be accepted.

The proposal's failure leaves GM with little choice but to file for bankruptcy.

Chrysler close to sale

Another American car maker, Chrysler, looks set to clear its last major hurdle in its sprint through bankruptcy court, with a judge is expected to over rule more than 340 objections and approve its sale to a group that includes the Italian car maker Fiat.

Less than 30 days after it filed for bankruptcy, Chrysler is seeking approval to sell its stronger operations to a "New Chrysler" owned by Fiat, Chrysler's labour unions and the US and Canadian governments.

The sale will complete the Obama administration's goal of reorganising Chrysler in 30 to 60 days, largely thanks to government financing of the bankruptcy and Fiat's role as a buyer.

Chrysler shut its operations when it filed for bankruptcy, which lent weight to the argument that the sale needed to be approved quickly.