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GM still wants state aid for Opel; German minister has other view

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GM still wants state aid for Opel; German minister has other view



NOVEMBER 13, 2009 10:46 CET

General Motors Co. said on Friday it wants state aid to help restructure European arm Opel. The comments come a day after GM's chairman, Ed Whitacre, told a German newspaper: "I believe that we will not need any money from the (German) federal government for Opel. If Mrs. Merkel doesn't want to give us anything then we will pay for it ourselves.”

Whitacre's statement appeared in the Thursday edition of Germany's Muenchner Merkur newspaper.

Following the publication of the interview, German Economy Minister Rainer Bruederle said that GM did not need state aid for Opel because the company can cover the cost of restructuring by itself.

German public television station ZDF reported that Opel labor leader Klaus Franz called talk of GM not needing aid "short-term propaganda." He added that Opel's works council would not negotiate with GM until it had laid out a plan for the company for up to 2014.

The topic of aid is politically sensitive because German politicians feel betrayed by GM's decision to keep control of Opel after agreeing in September to sell a majority stake in the automaker to a consortium led by Canada's Magna International Inc.

That deal had the full support of Chancellor Angela Merkel's German government, which was ready to provide Magna billions to restructure Opel.

Mixed messages

On Friday GM Europe said: "The restruturing of Opel for long-term sustainability requires involvement and financial support from all stakeholders, including employees and governments. We remain in discussions with governments to engage our plan in the same way they were willing to do with the Magna proposals to provide the best possible footing for Opel/Vauxhall success."

In addition to Whitacre's comments, GM CEO Fritz Henderson has indicated the company could rely on U.S. taxpayer money if needed, but believes European governments are willing to assume the risk since GM's restructuring plan is just as extensive as Magna's was.

Responding to concerns from European Union competition authorities, Berlin had said it would be willing to extend support to any investors in Opel although it had earlier earmarked 4.5 billion euros ($6.69 billion) in aid if Magna won.

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