General Motors would need to raise US$4.3 billion if it decided to keep Opel, a report claims. This option is being considered along with bids from companies like Magna.
General Motors may yet retain Adam Opel as one of its companies, a report has revealed. Accroding to The Detroit News, the General is discussing ways of unbundling the stalemate being experienced in the negotiations to sell Opel.
One of the solutions apparently being punted is the retention of the company. About US$4.3 billion would be needed to realise this option. Considering the prevailing situation in financial markets such an amount seems highly impossible to raise, especially by a company barely out of bankruptcy.
GM is also reviewing a couple of serious bids. Of course a proposed agreement exists between GM and Magna International of Canada whereby the latter will buy 27.5% of Opel, the same for Russia's Sberbank, GM keeps 35% while employees get 10%. There is a snag with the Magna bid. A source says a rival bid from RHJ International SA of Belgium is better and simpler to implement than that of the Magna consortium. However the German government seems to show a preference towards the Canadians since it says it will provide Opel with US$6.4 billion in loans but only if the Magna-led bid is chosen.
Another twist to the story is that as part of the conditions agreed upon when the US Treasury Department loaned US$50 billion to GM, the department has the right to block any GM transaction involving over US$100 million.