German Chancellor Angela Merkel paid a 90-minute visit to the Opel Insignia production site, the European subsidiary of U.S. automaker General Motors Corp. (GM), in Rüsselsheim on Tuesday and reportedly gave assurances that any investor in Opel would have state support. Merkel was accompanied by Hessen's State Premier Roland Koch, German Defense Minister Franz Josef Jung and Hessen's Economic Minister Dieter Posch.
GM is fighting hard for survival, thanks to the global economic slump and its own follies. It was reported recently that GM hired Commerzbank AG (CRZBY.PK) to identify an investor for its German Adam Opel AG unit. In an effort to raise about 3.3 billion euros or $4.5 billion in Europe, GM was reported to be mulling the sale of a stake in Opel.
Earlier in March, the European unit of the automaker delivered a plan to save Opel brand. GM said the confidential plan delivered to the German government would make Opel profitable by 2011. The three point public outline for Opel's survival included receiving 3.3 billion euros in credit or credit guarantees from the government.
However, Merkel's coalition is reportedly not unanimous in its rescue plans for the automaker. Her Christian Democrats prefer a private investor to save Opel, while the Social Democrats want the state to take a stake to protect Opel's 26,000 jobs.
Addressing Opel's employees on Tuesday, Merkel reportedly hinted that taking a direct stake in Opel was not a priority for the government.
GM has received $13.4 billion in federal loans from the U.S. Treasury, as part of Troubled Asset Relief Program, and has sought another $16.6 billion. While receiving the aid, the company was asked to present plans of long-term viability by mid-February. The Obama Administration said Monday that the restructuring plans offered by GM and Chrysler, LLC do not go far enough to warrant additional government assistance.
Rather, the embattled automakers will be allowed a limited period of time to fundamentally restructure, Obama said and added that an organized bankruptcy could be the best option for GM and Chrysler. The president noted that the government has no interest in running GM and would instead give the company 60 days to restructure.
Sunday, Rick Wagoner stepped down as GM chairman and chief executive officer with immediate effect. Fritz Henderson, the company's president and chief operating officer, succeeded Wagoner as chief executive officer.
GM is currently trading at $2.50, down $0.20 or 7.41%, on 11.74 million shares.
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