GM dashes hopes for quick Opel deal with Magna

Thu Aug 6, 2009 11:49am EDT
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By Christiaan Hetzner

FRANKFURT (Reuters) - General Motors on Thursday dashed hopes of members of the German government that a deal to sell its European operations to Canadian group Magna could be reached by the end of this week.

GM Group vice president and chief negotiator John Smith said the U.S. carmaker still had considerable problems with Magna's offer, remarks that seemed aimed at defusing mounting pressure from Berlin for GM to drop its resistance fast.

"Little progress was made in whittling down the outstanding issues, in part reflecting the return of some issues that we previously considered to be resolved," Smith wrote in a blog entry on the company website Driving Conversations.

Ahead of a general election next month, German politicians have been prodding GM to end a stalemate and sign a deal with Magna.

"I can report some progress (with Magna), resolving perhaps one-third of the issues during a first day of talks. However, the difficulties of getting to 'yes' with three parties in the room were very much in evidence yesterday," Smith wrote.

He reaffirmed that a simpler offer by rival Opel suitor RHJ had been all but wrapped up, and said the Belgian financial investor, led by ex-banker Leonhard Fischer, had presented an industrial concept as convincing as Magna's while at the same time requiring less taxpayer support.

One source close to the talks confirmed a report by the Frankfurter Allgemeine Zeitung paper that the heads of Magna and GM would meet in Detroit on Friday to try to break the deadlock.

Germany has already loaned Opel 1.5 billion euros ($2.16 billion) to stay afloat after GM signed a non-binding agreement to sell Opel to Magna in May. The U.S. carmaker needs Berlin to fund a costly restructuring program at Opel over the next two years while the European carmaker continues to burn cash.   Continued...

<p>The Reichstag building, seat of the German lower house of Parliament Bundestag, is reflected in an Opel car emblem in Berlin, August 4, 2009. REUTERS/Tobias Schwarz</p>