Page last updated at 15:15 GMT, Thursday, 20 August 2009 16:15 UK

Germany offers Opel suitor loan

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GM may announce its Opel decision on Friday

Germany has said it would be prepared to give a 4.5bn euros ($6.4bn: £3.9bn) loan to carmaker Opel if its favoured suitor is chosen to take over the firm.

Berlin is offering the money if Opel's US owner, General Motors (GM), sells the German-based business to Canadian car assembly and parts group Magna.

Magna is one of the two remaining bidders for Opel, the other being Belgian financial group RHJ.

The UK government said GM's choice of buyer should not be "distorted".

The BBC understands the winner will not be formally announced until at least next week.

This is because while the GM board is planning to meet on Friday, its choice of either Magna or RHJ still has to be discussed by the Opel Trust, which is due to convene next week.

This trust was set up to temporarily run Opel ahead of the sale, and both GM and the German government have a stake.

Splitting payment

Germany's Deputy Economic Minister Jochen Homann said the country's federal government, and individual German states with Opel sites, would split the payment of the initial loan.

It's possible that the GM board will review both offers on Friday and will give a recommendation
Germany's Deputy Economic Minister Jochen Homann

He added that they would be prepared to do this without waiting for other European countries with GM factories - such as the UK and Belgium - to contribute their own loans.

"We could envisage making a loan available, then later agreeing precisely how the costs are to be shared out with the other European countries," added Mr Homann, who leads German's Opel taskforce.

When asked whether Berlin would offer a similar loan to GM if RHJ were chosen, Mr Homann said: "The question doesn't arise, because the German government has a preference for Magna's improved offer."

"It's possible that the GM board will review both offers on Friday and will give a recommendation," added Mr Homann.

Magna's offer for Opel is backed by Russia's Sberbank.

Germany said Magna would have to pledge to invest 450m euros of its own funds in Opel to get the 4.5bn euro loan.

Meanwhile, Germany's Frankfurter Allgemeine Zeitung has speculated that the loan will be expensive, carrying an interest rate of 10.5%.

'No UK closures'

Opel employs a total of 54,000 workers across Europe, with 25,000 based in Germany.

Its Vauxhall UK business employs about 5,000 people across its two sites in Luton and Ellesmere Port.

Magna has said that "no immediate plant closures are contemplated" in the UK should its bid be successful.

RHJ is also expected to support saving both Vauxhall factories, but may ask workers to take pay cuts.

GM was forced to put Opel up for sale as part of its massive restructuring that saw it go into Chapter 11 bankruptcy in the US - before emerging as a leaner company with less debt.

The German government has already given Opel 1.5bn euros of short-term loans to help it maintain its finances until the sale to either Magna or RHJ is concluded.

UK business secretary Peter Mandelson said he expected the carmaker to "take an objective, commercial decision about the future of its European operating divisions."

"This decision, above all, needs to secure the long term viability of both Opel and Vauxhall in the UK and should be not be distorted by political considerations in any one country," he added.

"The UK Government has asked the GM board to take full account of the relevant interests in all European countries as this will shape the public funding decisions by all the member states and state aid approval by the European Commission."



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