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GM's Opel unit seeks German loan guarantees
By John Reed in London and Chris Bryant in Berlin
Published: November 14 2008 20:44 | Last updated: November 14 2008 20:44
General Motors' Adam Opel unit is seeking loan guarantees from the German federal government and four states where it has plants to protect its business from GM's worsening finances.
The move comes amid signs of tightening credit conditions for GM, which with Ford Motor and Chrysler is seeking a taxpayer-funded bail-out from the US Congress and is lobbying for aid from governments of some other foreign countries where it operates.
"We want to protect Opel's facility to compete even in this globally difficult situation," said Hans Demant, chief executive, of the guarantees, which Opel said it needed to continue investing in products and equipment.
The carmaker said it was still discussing the conditions for aid with government experts and declined to provide further details before the talks were completed.
Roland Koch, state premier of Hesse, told a news conference that a broad estimate of the total credit guarantees required by Opel was €1bn ($1.27bn), according to Reuters.
He added that the federal government was likely to cover 60 per cent of these needs, with the remaining €400m shared between the four German states that have Opel operations.
"The aim of the current talks is to prepare additional backing for loans, because the global financial situation of our parent company GM has deteriorated," said Klaus Franz, Opel's union leader.
Apparently addressing fears in Germany that the funds might go to help GM's ailing core US operation, Mr Franz said that they would "under no conditions be used outside of Europe".Okay, and not one cent of the 50B should leave the shores of the U.S.
Germany's finance ministry said: "We will hold talks with all the concerned parties next week to see what can be done."
GM's formerly profitable European arm swung into financial loss in the third quarter of this year, hurt by slowing vehicle sales in big markets like Germany.
Copyright The Financial Times Limited 2008
