GM board discusses Opel but mum on talks
The General Motors board on Friday discussed the fate of a deal covering its European operations, including ailing German unit Opel, but officials declined to immediately provide details.
"We're not going to be saying anything today," GM spokeswoman Julie Gibson said after a conference call among the board of directors of the government-controlled auto giant.
GM emerged from bankruptcy in July after wiping out 47 billion dollars in debt in a restructuring that left it majority-owned by the US government.
The 100-year-old company, once the world's largest automaker, is feeling the heat from Germany which wants it to sell Opel to Magna International, a Canadian auto parts manufacturer backed by state-owned Russian bank Sberbank.
GM, however, prefers a rival bid from Brussels-based investment group RHJ International.
Gibson reiterated that the next bid process steps by the GM board would include a review of the proposals and their financing implications.
"The board would then potentially come to a recommendation that would be communicated to the Opel Trust. The Opel Trust would need to approve the recommendation before any agreement can be signed, which would also be made public," she said.
GM officials have indicated a final decision might not come until next week.
Earlier this week, GM officials said privately that there were still several issues that had not been resolved regarding the bid for Opel from Magna. Opel also is responsible for a large portion of GM's future product development.
GM officials have expressed concern about intellectual property rights protection, the ultimate fate of Opel in Russia and whether Magna would be willing to sell back its controlling stake to GM in the future.
They have also indicated that the terms offered by Magna's rival, RHJ, appeared more favorable to GM's long-term interests.
Magna, however, is favored by the German government, which is putting up the money for Opel's rescue amid fears of major job losses.
German Chancellor Angela Merkel, who is seeking a second term in September 27 elections, pressed her preference in a newspaper interview published Friday.
"Right now I am very skeptical about the chances of RHJ. We have to find a solution together with General Motors. Our preference is clearly with Magna," Merkel told the Frankfurter Allgemeine (FAZ) daily.
"Magna has experience making cars and has the better plan," Merkel added.
Opel, which has 25,000 employees in Germany and another 25,000 elsewhere in Europe, is considered too weak to survive without a partner.
Magna is offering 350 million euros (499 million dollars) plus 150 million euros in a credit line for Opel while RHJ has pledged 275 million euros but is seeking less state aid.
On Thursday, the Frankfurter Allgemeine reported that Jochen Homann, the head of the German government's "Opel Task Force," had put up a 4.5-billion-euro (6.4-billion-dollar) loan to help smooth the Opel sale.
Germany has already provided 1.5 billion euros in short-term loans to enable Opel to cover its day-to-day operating costs.
Both Magna and RHJ want to cut 10,000 jobs at Opel but Merkel and the state governments where Opel has factories prefer Magna because fewer of the cuts would fall in Germany than under RHJ's proposals, the FAZ noted.
Britain's business minister, Peter Mandelson, urged the GM board Thursday to make an "objective" decision which will secure the long-term viability of both Opel and Vauxhall, the British GM brand that employs around 5,000 workers at two sites in Britain.
The decision "should be not be distorted by political considerations in any one country," Mandelson said in a written statement to AFP.