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Germany ready for five billion euro Opel bail out

(AFP) / 28 February 2009

BERLIN - The German government is prepared to step in to help auto maker General Motors Europe’s Opel division with a bail out of up to five billion euros (6.3 billion dollars), a report said Saturday.

The state was ready to shore up the company and as a last resort take a temporary stake of no more than 20 percent, the Leipziger Volkszeitung newspaper said quoting sources close to the government.

The government regarded as unviable, however, the company’s own rescue plan, the report added.

The head of GM Europe Carl-Peter Forster said Friday Opel needed 3.3 billion euros (4.2 billion dollars) in aid to survive after presenting its supervisory board with a plan to save the car maker.

Forster said General Motors Europe would present the plan to German authorities on Monday, and that it included 3.0 billion euros from GM itself along with around one billion euros in cost savings.

Opel would repay any state aid by 2014-2015, he said.

The rescue plan was required by German authorities before any public aid could be granted to Opel, which has been hit by a global auto slump and massive financial problems at its troubled US parent General Motors.

GM employs around 55,000 workers in Europe, including almost 26,000 at Opel.

Meanwhile, other reports said Opel and German car manufacturer Daimler, maker of Mercedes-Benz autos, were in negotiations over the possible sale of one of Opel’s factories.

Opel’s plant in the central city of Eisenach might could go to the luxury car maker, resulting in the construction of a new Mercedes factory in Hungary “possibly being abandoned,” said the Thueringer Allgemeine newspaper.

The company was examining “to what extent the Hungarian project could be stopped,” sources said.

Daimler said last year October it would build the factory in Hungary at a cost of about 800 million euros (1.2 billion dollars) to boost production of smaller models.




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