Opel's sale process is still ongoing and the end seems so distant.....unless GM changes its mind!!! Below you can read the story published by Bloomberg.
General Motors Co. advisers are recommending the board consider spurning a German-backed sale of its Opel unit to retain a bigger presence in Europe and Russia, a person familiar with the discussions said.
The advisers suggest that GM seek aid from other European governments to retain ownership of Opel as an alternative to surrendering control to a group led by Canada’s Magna International Inc. or to Brussels-based RHJ International SA said the person, who asked not to be identified because the talks aren’t public.
GM’s new board, dominated by members appointed after the Obama administration forced the company into bankruptcy, is questioning the decision made by previous directors to give up control of the unit to save it. The delay is a setback for German Chancellor Angela Merkel who is pressing for a quick resolution to the matter.
“Every day counts for workers and for the economic situation” of Opel, Merkel said in a written summary of an interview with ZDF television. “I’m hoping that we can make progress in the new week.”
Opel has enough cash to operate well into the fourth quarter without new loans, people familiar with the unit’s finances said. GM’s new 13-member board has held meetings on Aug. 4 and Aug. 21 without an Opel decision. The next board meeting isn’t scheduled until September, the people said.
Opel’s position has improved as a government incentive for motorists boosted new-vehicle sales in Europe, similar to the U.S. “cash for clunkers” program. Rising sales in Europe have allowed Opel to operate past when it had been forecast to run out of cash.
‘Urgently Necessary’
GM has been building plants and adding capacity in Russia, seeing it as an important emerging market for Opel.
GM said in February it needed 3.3 billion euros ($4.7 billion) for a plan to close plants and trim workers and return its Opel operations to profit. Germany has backed a 4.5 billion euro plan by Magna that would leave GM with 35 percent ownership in the unit it bought in 1929. GM placed it in control of a trust when it filed for U.S. bankruptcy protection in June.
Merkel, who restated her preference for an offer for Opel from Aurora, Ontario-based Magna, said she “regrets” the failure of GM’s board to take action when it reviewed bids on Aug. 21. A decision by GM is “urgently necessary” because of Opel’s “economic situation,” she said.
Elsewhere in Europe
Opel and its sister brand Vauxhall have operations in the U.K., Spain and Poland, among the larger nations that may be asked to contribute aid to pay for the Ruesselsheim, Germany- based automaker’s restructuring.
An agreement with Magna or RHJ is still the more likely option, with insolvency the least favorable, two people said Aug. 21. They asked not to be identified because the deliberations aren’t public.
Merkel, faced with rising unemployment as national elections loom on Sept. 27, said Magna made a “very good offer” for Opel that she believes will secure more German jobs. Her grand coalition government of Christian Democrats and Social Democrats is seeking to protect about 25,000 Opel jobs in Germany as Europe’s largest economy emerges from its worst recession since World War II.
Germany agreed to back Opel’s sale with 1.5 billion euros in short-term loans in May, picking Magna as the preferred bidder. Prime ministers from two of the four German states with Opel plants have said those funds won’t be available to RHJ, whose assets include some former properties of Ripplewood Holdings LLC, the private-equity firm founded by Timothy Collins.
Tracy Fuerst, a Magna spokeswoman, declined to comment on the situation in an e-mail Aug. 22.
Funding Information
GM will ask Germany for more information about financing options, including funding for RHJ. The Detroit-based company will recommend its preference to the Opel Trust board, the panel assembled to decide Opel’s fate. That board includes two GM representatives and two representatives of Germany. A fifth, so- called neutral member does not have a vote.
GM had expressed concerns that an earlier Magna bid would exploit GM’s intellectual property in Russia. Magna’s investment partner is Moscow-based OAO Sberbank. A competing bid from RHJ International was described as a “simpler proposal” by GM’s top negotiator.
“Perhaps, there is in part a difference of opinion between GM and the German -- as well as the European -- interests,” Merkel told ZDF. “I believe we’re still on a fairly good path. Further talks will still be needed.”
Opel Dealers
Opel dealers stepped up the pressure on GM yesterday to take a decision, endorsing Magna’s offer as “the best option,” according to an e-mailed statement. A further delay “is not acceptable” in light of next month’s Frankfurt Motor Show and the German elections, Jaap Timmer, chairman of the Euroda trade group, representing about 4,000 of the brand’s retailers, said in the statement.
In a further incentive to GM, the German government offered on Aug. 20 to shoulder the entire 4.5 billion euros in loan guarantees for Magna’s offer and negotiate with European Union countries on burden-sharing afterward. GM employs about 55,000 workers in Europe.
Merkel’s desire to see through a sale to Magna is shared by her main Social Democrat opponents. Foreign Minister Frank- Walter Steinmeier, who will challenge Merkel in next month’s election, said he will undertake “intensive efforts” to press for a “final decision in the next few days” on Opel’s future, according to Germany’s weekly newspaper Bild am Sonntag.
Steinmeier phoned U.S. Secretary of State Hillary Clinton yesterday to say that a decision on Opel’s future should be taken “as quickly as possible” and that Germany’s interests as the carmaker’s main guarantor “must be considered in all pending decisions,” according to an e-mailed statement from the ministry.
“We’re now just before the finishing line, and I hope we will soon be there,” Merkel told ZDF.
Source: Bloomberg
