BERLIN — In a negotiating session here that stretched until nearly 5 a.m. Thursday, German and American negotiators failed to agree on a crucial bridge loan to sustain Opel and the rest of the European operations of General Motors in the event the beleaguered automaker files for bankruptcy.þþBut officials did manage to narrow the field of potential suitors for Opel to two companies, Fiat, the Italian automaker, and Magna, a Canadian auto parts giant. A Belgian private equity firm as well as a Chinese automaker were knocked out of contention.þþGerman leaders expressed frustration with the United States Treasury, citing inadequate guarantees that European assets would be protected from the likely bankruptcy filing in American courts and that German money would be used only for Opel.þþ“We don’t have the assurances we need to approve a bridge loan,” said Karl-Theodor zu Guttenberg, the German economy minister. German and American negotiators will return to the bargaining table to iron out the bridge financing on Friday, but it was further complicated by a request from G.M. for an additional 300 million euros, or $418 million, on top of the already promised 1.5 billion euro aid package from Berlin.þþRather than watching the horse race, G.M. officials in the United States focused on Opel’s securing bridge financing so it can survive until a new owner can take over. After emerging from the likely bankruptcy proceedings, G.M. will retain a minority stake under the proposals submitted by Magna as well as by Fiat. þþAfter the all-night session here, Frank Stronach, the chairman of Magna, said his company was willing to provide the additional 300 million euros in bridge financing but wanted a German government guarantee in the event the deal fell through.þþ“We have lots of cash,” Mr. Stronach said. “We have no problem.”þþMuch of the meeting Wednesday night and early Thursday morning centered on forming a trust that would protect Opel and the rest of G.M.’s European operations from being pulled into any American bankruptcy proceedings. Through the night, the Germans went over the trust’s possible structure while also negotiating with officials of the Treasury, as well as G.M.þþAt one point the German negotiators grew so frustrated with the Treasury’s representative here that they arranged a video link to Washington to speed up the talks. þþThough the failure to come up with an agreement Thursday surprised many observers, the negotiators in Berlin and Washington are still aiming to reach a deal before the June 1 deadline imposed by the White House for G.M. to restructure.þþOn Thursday the European Commission called a meeting of trade and economy ministers for Friday to discuss Opel and insisted that any solution must comply with the group’s state aid rules.þþChancellor Angela Merkel and other German leaders evaluated the potential bidders hours after bondholders at G.M. rejected an offer to exchange $27 billion in debt for a small amount of stock. G.M. had said that without the bondholders’ approval, it would seek bankruptcy protectionþþBy keeping the bidding process alive, the German government can increase its leverage over Opel’s eventual buyer, experts said, safeguarding German jobs while potentially lowering the amount of additional government aid required in the future.þþ“Germany is in the comfortable position of selecting a bidder from several candidates, and will try to get as many concessions in terms of jobs and financial support as possible,” said Arndt Ellinghorst, an analyst with Credit Suisse in London. þþWhoever emerges as the winner, the conclave in Berlin marked the end of an era for American industry in Europe, as G.M. prepared to yield control of businesses that date back eight decades.þþG.M.’s direct link to Germany began when it acquired Opel in 1929, and survived the Great Depression, World War II and the rise of new competitors from elsewhere in Europe as well as Asia. But weighed down with debt, and losing critical market share in North America, G.M. had little choice but to give up majority control of its unprofitable European operations as bankruptcy loomed.þþMagna, a Canadian auto parts maker that has teamed up with Russia’s Sberbank, emerged as the favorite of German leaders, who fear that a rival offer by the Italian automaker Fiat could cost more jobs.þþ“The chancellor has to examine the offer by Magna very closely because in my opinion, as far as I’m informed, it’s the most realistic, the best offer,” said Peter Struck, the parliamentary leader of the Social Democrats, who, with the Christian Democratic Union of Mrs. Merkel, form Germany’s governing coalition.þþBut Fiat’s charismatic chief executive, Sergio Marchionne, met with Mrs. Merkel on Tuesday in a last-ditch attempt to sell her on Fiat’s plan, which would make Opel part of a global giant including Fiat and Chrysler that could ultimately produce nearly six million cars a year.þþG.M. officials in the United States are more focused on Opel’s securing the $1.5 billion in bridge financing rather than in endorsing one bidder.þþInitially, potential acquirers were seeking 5 billion to 7 billion euros in state aid, but as the talks go on and the bidders become more desperate, Mr. Ellinghorst added, they might be willing to forgo a part of that money.þþHans-Werner Sinn, the president of the Ifo Institute in Munich, and a prominent German economist, concluded in a study that the bidders for G.M.’s European assets were demanding 198,000 euros to 296,000 euros per job saved — figures that Mr. Sinn called “extortion.”þþ“The interested parties know full well that we are in the middle of a national election campaign,” Mr. Sinn said. “In these times, it is almost impossible for politicians to let a tradition-laden company like Opel to go bankrupt.”þþThe Chinese offer came after Berlin’s May 20 deadline for bids, and consisted of only a three-page proposal, making German officials skeptical that Beijing Automotive was up to the task of reviving Opel and disentangling it from General Motors.þþBut the interest from the Chinese signaled how drastically the auto industry landscape has shifted, as power moves to more efficient Japanese companies from Detroit and its once-formidable companies like G.M. and Chrysler, which are burdened by debt and the cost of health insurance for hundreds of thousands of current workers and retirees.þþG.M.’s troubles and the support of Sberbank for the Magna bid, however, also open the door for Russia to raise its profile in the global auto industry.þþCar manufacturing in Russia has lagged badly behind the West for decades, even while the market for vehicles boomed recently as Russians’ wallets were fattened by trickle-down oil money.þþThe Russian state bank intends to buy a share in Opel in exchange for a commitment to form a joint venture with Russia’s deeply troubled carmaker, the Gorky Automobile Factory, or GAZ, according to Elena Sakhnova, a transportation analyst at VTB Bank in Moscow.þþ
Source: NY Times
