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Old 10-19-2009, 08:12 AM   #1
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Default GM is ready to keep Opel if EU blocks Magna deal

GM still prefers a sale to Canadian supplier Magna and its Russian partner Sberbank but GM executives are prepared to move to a Plan B if the deal falls through, the newspaper reported.

The plan would mean GM keeping control of Opel and implementing deeper restructuring actions than Magna is planning, including closure or sale of an Opel car factory in Germany, the newspaper said.

Insolvency possible
GM still aims to finalize the sale of Opel unit to Magna and Sberbank, Russia's largest commercial bank, midweek, The Wall Journal Street Journal said, but if forced to go alone, GM would fund Opel's restructuring by seeking government support or by putting Opel into insolvency.

Under intense pressure from Germany where half of Opel's 50,000 employees work, GM last month agreed to sell Magna and Sberbank a 55 percent stake in Opel but the agreement has not yet been finalized.

The European Commission is concerned about a 4.5 billion euro ($6.71 billion) aid package offered by Berlin to Magna to help restructure Opel.

On Friday, EU Competition Commissioner Neelie Kroes wrote to Germany's Economics Minister Karl-Theodor zu Guttenberg and said GM should be allowed to reconsider the bidding process because of indications that an offer of German state aid was made only to Magna's bidding group.

Kroes said such a precondition for aid would be incompatible with EU state aid and internal market rules.

GM's senior management initially favored a rival offer from Belgian investor RHJ International because it offered the chance for the U.S. carmaker to buy back Opel at a later date,

Berlin offers assurances
A European Commission spokesman said on Monday that the German government has given written assurances to GM and the trust established to keep Opel separate from GM's recent bankruptcy that its aid offer for Opel is not tied to the choice of investor or plan.

"Germany has now written to GM and the Opel Trust, giving them the assurance we asked for," spokesman Jonathan Todd said. "The Opel Trust and GM will now have to reconsider in light of these written assurances."

RHJ said it was no longer interested in Opel, having agreed to buy UK wealth management unit Kleinwort Benson from Commerzbank last week.
"We have moved on. Financ
ial services is now our priority," a spokesman said
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