Print

Mail

wiki links

Germany examines Opel request for loan guarantees

Germany is examining the carmaker Opel’s request for government credit guarantees, German Finance Minister Peer Steinbrueck said.

“We are looking into it to see whether it’s appropriate,” Steinbrueck said on Friday night in Washington on the sidelines of the G20 summit of developed and emerging economies.

Opel — a unit of General Motors Corp, which itself is seeking a US government bailout — said earlier on Friday that it wanted the loan guarantees from German federal and state governments after a sharp downturn in orders but insisted it did not need cash injections.

The German-based carmaker did not name a sum for the guarantees it wanted, but Kurt Beck, the prime minister of the western state of Rhineland-Palatinate, said it was about 1 billion euros (US$1.27 billion).

Steinbrueck said a meeting between Opel representatives and the four US states where Opel has factories would take place on Tuesday, adding that the talks were still at an initial stage.

“The goal of the current talks is to ready security for additional loans because the global financial situation of parent company General Motors has worsened,” Klaus Franz, head of GM’s works council, said on Friday in a statement distributed by Ruesselsheim, Germany-based Opel’s press department.

The request is for loan guarantees if “GM’s financial situation were to intensify” and affect Opel, the German unit said in the statement.

Opel, which targets mainly low-income buyers, has been among the automakers hardest hit by the credit crunch.

The brand’s European sales have dropped 12 percent this year, more than twice the industrywide decline, according to the European Automobile Manufacturers’ Association.

In the statement, managing director Hans Demant said that “we want to secure Opel’s competitiveness in this difficult situation.”

The carmaker, which is known as Vauxhall in the UK, said that it would use funds from government aid to develop vehicles and for equipment for its German factories.

“Under no circumstances would the money be used outside Europe,” Opel said in the statement.

Demant said Opel was only requesting credit guarantees. “At this time, we have no liquidity problems,” he said.

Opel, which employs 25,700 workers, and other German carmakers, such as Daimler and BMW, have announced temporary closures of factories to cut costs after a huge drop in orders.

In the US, GM, Ford Motor Co and Chrysler LLC would receive US$25 billion in loans out of a US$700 billion financial bailout package approved earlier this year under legislation that US Representative Barney Frank of Massachusetts and Senator Carl Levin of Michigan are writing. US President George W. Bush’s administration opposes using those funds for the auto companies.
This story has been viewed 697 times.