GM board to consider Opel final offers on Friday

• Source: Gasgoo.com
• [08:33 August 21 2009]
• Comments

The board of General Motors Co. is to meet Friday to discuss bids for its European Opel/Vauxhall unit, and two people close to the discussions said an announcement could come next week.

GM's revamped board met last week to review "final" offers for a majority stake in the unprofitable European unit, though the two bidders -- Belgian investment group RHJ International SA and a consortium led by Austrian-Canadian car-parts maker Magna International Inc. -- are being pressed by German authorities to tweak the proposals.

The auto maker technically has a final say in what GM insists will be a "commercial" decision, but the proposed sale has become politically charged because of its reliance on as much as €4.5 billion ($6.36 billion) in government guarantees, mainly from German federal and state authorities.

"The board then has to make a statement in principle," German Economics Minister Karl-Theodor zu Guttenberg said about the planned GM meeting.

German officials are pressing the bidders to inject equity equivalent to 10% of the final government guarantees as part of their offers.

GM, Magna and RHJ declined to comment.

The Opel/Vauxhall business incurred a loss of $2 billion in the first quarter of 2009 and is being run by a trust with €1.5 billion in German government loans.

GM officials have said the unit doesn't need more funds before its sale as cash burn has abated.

Europe is GM's single largest market, with unit sales ahead of both the U.S. and China. Amid uncertainty over its future, Opel still managed to increase market share in Germany -- GM's third-largest national market -- in the first half of the year.

Magna, in a consortium with Russian savings banks OAO Sberbank and auto maker OAO GAZ, was chosen in May as the German government's preferred bidder.

(WSJ)