Opel's future thrown into doubt as GM mulls sale

opel-logoBerlin - US carmaker General Motors' sale of its troubled Opel unit has been thrown into uncertainty after GM said Friday it was putting the deal on hold until next month amid speculation it may seek to retain control of its European offshoot.

The Detroit-based auto giant announced plans more than a month ago to hive off a 55-per-cent stake to a consortium led by the Canadian auto parts group Magna International and which included the Russian bank Sberbank.

But GM's top negotiator on Opel, John Smith, wrote in a blog Friday that the US carmaker will consider changes to the Magna deal at a meeting set for November 3.

"Given the significance of the Opel transaction, GM's board will soon meet in its regularly monthly meeting to consider (German Economics Minister Karl-Theodor zu Guttenberg's) letter and changes to the Magna/Sberbank proposal that have occurred since its last review on September 9," Smith wrote.

Zu Guttenberg wrote to GM saying Berlin's financial support for Opel was not solely for the Magna-led bid.

Meanwhile, the German news group Spiegel Online reported Friday that the GM board was now likely to consider retaining control of Opel at its November meeting and to use state funds to restructure its European offshoot.

The renewed sense of uncertainty surrounding Opel came after Magna appeared to clear a major hurdle in its push to acquire the majority holding in the GM unit after it reached an agreement with Spanish trade unions on the deal.

However, Berlin officials insisted Friday that they had no information that GM had changed its course on selling the majority stake to the Canadian-Russian consortium.

Nevertheless, plans for signing the agreement between GM and Magna have already been delayed.

Berlin officials also told the German Press Agency dpa Friday that the signing of the proposed 4.5-billion-euro (6.8-billion-dollar) package of state aid for Opel would be postponed until after Germany's new coalition government was in place.

Opel is at present existing on a 1.5-billion-euro bridging loan supplied by the German government.

German Chancellor Angela Merkel's Christian Democrat-led conservative bloc is currently attempting to finalize an agreement to form a new coalition government with the business-friendly Free Democrats (FDP) following last month's national elections in Germany.

Merkel has said that she wants the new coalition government to be in office by the time Germany marks the 20th anniversary of the fall of the Berlin Wall on November 9.

However, leading members of the FDP have criticized the state-back guarantees to help Magna restructure Opel, which has operations in Belgium, Poland, Britain and Spain. About half of Opel's 50,000- strong workforce is in Germany.

In addition, the sale to the Magna-led consortium has also faced stiff criticism from unions and governments in other countries where Opel has operations.

They argued that their workforces could be disadvantaged by Berlin's financial support for Opel.

But Spanish Industry Minister Miguel Sebastian said Thursday that Spain's trade unions and the Magna-led consortium had reached a basic agreement guaranteeing the future of a Spanish Opel factory for the next 10 years.

However, adding to the doubts about Opel's future, the European Commission last week raised objections to the sale, arguing that the planned German aid could be in breach EU competition rules.

In particular, the commission expressed concern that the financial support promised by Berlin was conditional on the Magna-led consortium acquiring the majority holding in Opel.

In accepting the Magna-led offer, GM decided against a bid for Opel made by Belgium-based private equity investor RHJ International. (dpa)