A steering committee of Germany’s rescue funds for Opel was meeting today but not expected to reach a definitive decision on aid for the loss-making GM unit, according to Berlin’s economy minister Rainer Bruederle.
The committee was discussing whether to recommend that taxpayers support loans to Opel worth about EUR1.3bn (US$1.6bn) that would finance some 8,300 upcoming job cuts.
“A definitive decision will definitely not be able to be taken today,” Bruederle told reporters in Brussels.
GM is prepared to contribute half of the EUR3.7bn Opel requires in total funding and wants European taxpayers to fund the rest since Opel is a European company. GM’s return from bankruptcy to profitability in just 12 months is expected to undermine the Detroit company’s arguments for support.
A final decision on aid is likely to be made by senior members of the German government, in conjunction with the states affected. As many as 120,000 jobs in Germany alone will be affected by the decision.
German business daily Handelsblatt reported that three of four German states with Opel plants are ready to grant the carmaker guarantees, raising pressure on chancellor Angela Merkel for her government to do so too.
GM generated US$1bn in free cash alone in the first quarter, its first three-month period in the black since 2007, and has a liquidity cushion of nearly US$36bn thanks to The White House and analysts believe that this means there is little evidence to suggest it cannot fund its fully-owned German unit if need be.