Magna said to have agreed deal
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Germany and the United States today have possibly their last chance to save Opel and agree a plan to shield the carmaker from the all but inevitable bankruptcy of parent General Motors but efforts to forge a rescue for GM’s European unit were under threat after Fiat said it would skip crucial talks and a Reuters source said frustration was rising at rival bidder Magna.
The bidders scrambled to submit preliminary contracts setting out plans for bridge financing and a temporary trustee scheme to protect Opel’s assets before a rapidly approaching 14:00CET deadline.
A meeting set to take place in Berlin later on Friday between German and US officials “will only start if the interested parties have provided something substantial,” government spokesman Thomas Steg told news agency AFP.
A first round of talks earlier this week between the German and US governments, the bidders and GM collapsed amid mutual recriminations.
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By GlobalDataFiat CEO Sergio Marchionne spoke out on Friday in a move one analyst told Reuters was the first step in Fiat pulling out of the running. Marchionne said he was still interested in Ruesselsheim-based Opel, which employs 25,000 staff in Germany, but “more cannot be asked”
Marchionne is juggling a deal to buy assets from Chrysler – expected to close as early as today – with a bid for Opel, as part of his ambitious plan to create a European auto giant.
Marchionne said “the emergency nature of the situation cannot put Fiat in a position to take extravagant risks.” Marchionne said it was “unreasonable” to expect Fiat to provide funds to a group whose finances remain unknown.
Magna International is also reported to be growing increasingly frustrated with new demands from GM, after coming close to a basic agreement during talks that went on until the early hours of Friday, a source close to the negotiations told Reuters.
Magna’s co-chief executive Don Walker told Reuters late on Thursday that it would be open to collaborating with Fiat or other European automakers, if it was a “win-win” situation.
Meanwhile, loss-making Saab, which first sought protection from its creditors in February, was granted an extension until 20 August to line up a new owner and restructure its business.
Swedish business daily Dagens Industri reported late on Thursday that the two front-runners to buy Saab were Swedish luxury carmaker Koenigsegg and US financier Ira Rennert and his Renco Group, with Fiat in third place.
Saab and GM are due to name a preferred candidate among three remaining unnamed bidders in the comnig weeks.
A first round of talks that began in Berlin on Wednesday evening and ended 12 hours had been described as a “disaster” by German participants, according to Reuters.
Here in the UK, auto unions and industry observers last night said the government needs to put money up front if it wants to save jobs at Vauxhall.
Business secretary Lord Mandelson told Sky News he had received “categorical” assurances that Vauxhall production would continue in the UK under both Fiat and Magna, who are bidding to take over the firm.
Trade minister Gareth Thomas is attending a meeting in Brussels, called by the European Commission after the breakdown of talks in Germany to decide the company’s ownership.
He will be looking for confirmation from the German government that the interests of 5,000 Vauxhall workers are being considered in their search for a buyer to rescue the ailing company.
The United States government on Wednesday night balked at Germany’s plan to place Opel assets in a trust while a deal with a suitor was finalised and GM shocked negotiators with a surprise request for US$500m to fill a gaping funding hole.
The German government consequently refused to release EUR1.5bn in temporary financing it had pledged to Opel, which employs 25,000 staff in Germany alone.
On Thursday, GM announced it had reached a debt-for-equity swap with major bondholders, the clearest sign yet that bankruptcy was imminent.
Germany wants Opel’s assets in the trust to shield them from GM creditors once it files for Chapter 11.
“The goal of the Americans is to get as much money as they can from the Europeans,” German economy minister Karl-Theodor zu Guttenberg told ZDF television. “My goal is to prevent German taxpayer money from flowing to the United States.”
The Berlin-based government has set a deadline of 2pm local time on Friday for Fiat and Magna to reach preliminary deals with GM and the US government that would allow it to free up the bridge funds.
If deals are struck with one or both suitors, negotiations with all parties will resume at 4 pm, Reuters reported earlier.
Magna wants to use Opel to make a push into the Russian market and is favoured over Fiat by many in the German government and may have boosted its chances by offering to help cover the $500m requested by GM during the failed late Wednesday night talks.
“We have given both bidders an equal shot,” Guttenberg said. “Let’s see who comes up with the best offer.”
Should the talks fail again, Guttenberg has said insolvency is an option but German chancellor Angela Merkel, who faces an election in four months time, will want to avoid any step which might lead to mass job losses.
But she is under pressure from conservative allies to follow through on the insolvency threat if Washington does not provide Berlin with guarantees that German taxpayers will be protected.
President Barack Obama is due to visit Germany and meet Merkel in Dresden in a week.
