Link to my article on CNS News today:
Dusseldorf, Germany (CNSNews.com) – As the global financial crisis lashes the auto industry, Germany’s federal and state governments look set to bail out Opel, a subsidiary of General Motors Corp., with a reported two billion euro ($2.6 billion) rescue package.
Opel’s German management, which requested the aid, is struggling with a cash-flow crisis.
German managers point to failings at GM’s insolvency-threatened U.S. head office in Detroit. They claim they are back-owed billions of dollars in investment. Germany’s GM-Opel management is also considering breaking away from General Motors Corp. should it apply for insolvency. Opel employs more than 25,000 people in the German states of Hessen, Thuringen, North-Rhine Westphalia and Rhineland-Pfalz.
Chancellor Angela Merkel called for an emergency meeting in her office on Monday afternoon to discuss options with GM’s European president, Carl-Peter Forster, GM-Opel chairman Hans Demant, and union boss Klaus Franz. Also attending were Finance Minister Peer Steinbruck and Minister for Economic Affairs Michael Glos.
Proposals on the table include a federal bond or guarantee of around $1 billion. This would be supplemented by another $1 billion guarantee from the four affected German states. The funds are reportedly needed to allow the cash-strapped company to continue manufacturing and to pay its creditors.