Germany denies committee rejects GM aid request

8th June 2010, Comments 0 comments

Germany's economy ministry denied on Tuesday that a government committee had already rejected General Motors' request for 1.1 billion euros (1.3 billion dollars) in state loan guarantees for its Opel unit.

A parliamentary committee in Germany, home to four Opel plants and half of GM's 50,000 European employees, was due to report on Wednesday on the US auto giant's request, economy ministry spokeswoman Beatrix Brodkorb told AFP.

GM is prepared to pump 1.9 billion euros into the restructuring plan but is seeking 1.8 billion euros in loan guarantees from European governments. Germany has been asked to provide the lion's share, or 1.1 billion euros.

Recent comments from Economy Minister Rainer Bruederle and the conclusions of a sub-committee last week have indicated that Berlin will turn GM down.

German officials feel that GM, which emerged from bankruptcy and posted its first quarterly profit in three years in the first three months of the year, can provide the financing itself.

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

Bruederle on Sunday ruled out any "special treatment" for GM, which wants to cut around 8,000 jobs in an effort to turn around the loss-making Opel.

The final decision on GM's request rests with Merkel's government.

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.

GM also owns Vauxhall in Britain and has major factories in Poland, Spain and Austria as well.

© 2010 AFP

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