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GM units: Germany to disclose preferred bidder

Source: PTI
May 26, 2009 18:38 IST
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The German government is set to announce the name of the preferred bidder for General Motors' stricken European units -- Opel and Vauxhall, a move which may lead to one of the biggest state-supported bailouts of a company, a media report says.

"The German government is set to name a preferred bidder for General Motors' cash-strapped European operations, paving the way for one of the biggest state-supported industrial bail-outs in the country's history," the Financial Times said.

The report noted that German chancellor Angela Merkel would meet top officials from the US, General Motors and the bidders for GM's European units Opel and Vauxhall on Wednesday.

The three bidders in the running are Italian carmaker Fiat, Canadian car parts group Magna and Belgium-based financial investor RHJ International, the report said.

The successful bidder would get access to 5-7 billion euros (4.4 billion pounds and 6.2 billion pounds) in state guarantees.

The German government also wants to strike a binding agreement with GM and the US Treasury on shielding Opel or Vauxhall from an insolvency filing of the US carmaker, it added.

This is a pre-condition for a 1.5-billion euros government-backed bridging loan that Opel needs until a final deal can be sealed, the FT said.  

On Sunday, Merkel said Berlin had to act quickly to avoid Opel being dragged into a possible GM insolvency.

Quoting Merkel, the FT said, "We must tie up all the loose ends". . . by mid-week. She further said, "We do not want to end up in a situation where we become constrained by a possible Chapter 11 procedure."

Opel's owner General Motors could file for a 'surgical' bankruptcy protection as soon as May 31, as the ailing carmaker is struggling to persuade the US government to support its restructuring plans, the daily noted.

"The meeting on Opel is expected to stretch well into the night and a decision is likely to be announced late on Wednesday or early on Thursday," the FT said.

According to people close to GM, the report said the carmaker would carry on negotiating with more than one bidder even after the government's decision.

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