German states ready to help GM on Opel: Merkel

10th June 2010, Comments 0 comments

Four German states where General Motors' Opel unit has factories are ready to provide financial assistance to the US auto giant, Chancellor Angela Merkel said Thursday after meeting state chiefs.

"Today we talked about whether the Laender (states) could provide loan guarantees and it became clear, and they said so themselves, that they could do so," Merkel told reporters.

On Wednesday Merkel's government rejected a request from GM for 1.1 billion euros (1.3 billion dollars) in loan guarantees from a federal fund, saying GM has sufficient cash of its own.

GM is prepared to pump 1.9 billion euros into a restructuring of Opel, which foresees around 8,300 job cuts, and wanted 1.8 billion euros in loan guarantees from European governments including the 1.1 billion euros from Germany.

Germany is home to four Opel plants and 23,000 employees, half the European total. GM has said it wants to cut around 4,000 German jobs but unions fear that it may slash many more and even close plants after Wednesday's decision.

Merkel said that GM could apply to receive money from a government fund providing money for research and development into green technology.

She also said that GM's Europe boss Nick Reilly would meet with Economy Minister Rainer Bruederle in due course.

She added that GM, which emerged from bankruptcy and posted its first quarterly profit in three years in the first three months of 2010, could apply to the European Investment Bank (EIB) for funds.

"But in today's meeting the federal government was not able to make further commitments," Merkel said.

Reilly had said on Wednesday that GM was "very disappointed" and was reviewing its options, but that the main outline of the firm's restructuring plans would not be changed.

He said that the government in Britain, where GM owns Vauxhall, had agreed to guarantee 330 million euros in loans and that Spain has "indicated ... a similar type of amount." It also has plants in Austria and Poland.

Germany was ready last year to provide guarantees to Opel if GM sold it to Canadian auto parts maker Magna and Russian lender Sberbank, but GM scrapped the deal in October, annoying Berlin in the process.

Merkel, whose popularity has fallen sharply in recent months, is seen as wary of handing out more taxpayers' money after promising tens of billions of euros in guarantees to prevent a eurozone collapse.

Media reports have indicated that Merkel's squabbling coalition of her conservatives and liberals was split over Opel, with the latter -- which includes Bruederle -- opposed to any state aid.

© 2010 AFP

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