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Germany doubts GM-Opel revamp plan, report says

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Germany doubts GM-Opel revamp plan, report says

February 12, 2010 09:31 CET

BERLIN (Reuters) -- Germany's economy ministry is not convinced by a plan from General Motors Co. to restructure its European unit, Opel, Spiegel magazine reported on Friday, citing an internal ministry review.

Opel CEO Nick Reilly unveiled a restructuring plan on Tuesday under which the carmaker will invest 11 billion euros ($15 billion) by 2014 and axe 8,300 jobs in a drive to break even by 2011 and make a profit the next year.

"The viability is questionable," Spiegel reported, citing the ministry review, which added that there was a risk of state aid for Opel unjustifiably flowing to its parent company in the United States in the form of licence charges.

GM wants 2.7 billion euros in state aid from countries hosting plants -- including Britain, Germany, Poland and Spain -- to help finance the 3.3 billion Opel revamp.

Opel has asked Germany for 1.5 billion euros in state aid to fund 4,000 job cuts in its home country and another 1.2 billion euros from Spain, the UK, Austria and Poland.

Earlier this week, German Economy Minister Rainer Bruederle said: "We will carefully examine the documents."

Bruederle has repeatedly called on Opel parent General Motors Co. to fund its subsidiary's operations itself, and not just contribute 600 million euros toward the 3.3 billion euros it says it needs to get healthy again.

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