Merkel Offers Gm 4.5 Billion Euro Loan

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Germany yesterday upped the pressure on US car giant General Motors to sell GM Europe, which includes Germany’s Opel and the UK’s Vauxhall, to Berlin’s preferred bidder, Magna.

Chancellor Angela Merkel wants GM to choose an offer from the Canadian parts maker, which is backed by the state-owned Russian bank, Sberbank. GM’s board is widely believed to prefer an offer from Brussels-based investment group RHJ International.

German Economy Minister Karl-Theodor zu Guttenberg said that he expected GM’s board to make a ‘decision in principle’ on Opel late yesterday or today.

In order to speed the process up, the head of the German government’s ‘Opel Task Force’ has written to GM negotiator John Smith offering a 4.5 billion euros loan. Previously, the plan was for Germany to stump up the loan together with other European countries where Opel has factories, but the Task Force’s Jochen Homann said that Berlin has decided to go it alone for now.

Homann, who is also Germany’s Deputy Economic Minister, said the federal government and individual states with Opel sites would split the payment of the initial loan. ‘We could envisage making a loan available, then later agreeing precisely how the costs are to be shared out with the other European countries,’ he added.

Germany is willing to take this course of action because around half of GM’s 50,000 workers in Europe are employed in the country, but the UK, Spain, Poland and Belgium will still be expected to stump up cash at a later stage.

Both Magna and RHJ want to cut 10,000 jobs at Opel, but Merkel and the German state governments where Opel has factories prefer Magna because fewer of the cuts would fall in Germany than under RHJ’s proposals.

The UK plants are widely expected to face job cuts and even closure. Unite’s joint general secretary Tony Woodley was due to visit GMM Luton yesterday. On Wednesday night the Luton GM management announced that the night shift is to end on September 19.