General Motors should raise its share of the reorganization costs for its European arm Opel in order to get state aid from Germany, Handelsblatt newspaper reported on Monday, citing German government sources.
GM is asking European countries with Opel plants to contribute 2.7 billion euros ($3.7 billion) of aid toward the 3.3 billion euro revamp. Germany alone is being asked for 1.5 billion in loans or loan guarantees.
Handelsblatt cited the sources as saying GM should pay for at least half -- or 1.65 billion euros -- instead of the 600 million Opel's parent has committed. Otherwise it will be difficult to grant state aid, the paper quoted one of the sources as saying.
A German government official who declined to be named said: There definitely has to be a clear improvement.
Relations between the two sides have been frosty at best since GM's board shelved a deal in November to sell a majority stake in Opel to Magna that was backed by 4.5 billion euros in German taxpayer aid.
GM counted a 600 million euro payment as its contribution that it used to redeem a German government bridge loan and regain full control over Opel.
Since then it advanced another 650 million euros to Opel for bills that GM would have first needed to pay to its European operations in April and July.
The German government committee that decides on state guarantees is due to meet on Monday to discuss the case.
Handelsblatt also said without citing sources that the German economics ministry would be less willing to grant state aid to Opel, should a report by PricewaterhouseCoopers reveal Opel has not fallen victim of the economic crisis but had been in difficulties before.
(Reporting by Eva Kuehnen and Christiaan Hetzner in Frankfurt with Madeline Chambers in Berlin; Editing by David Holmes)