Business World

The board of General Motors Co GM.UL began meeting in Detroit on Tuesday as the German government stepped up pressure on the automaker to clarify its long-term plans for its European Opel operations.

The board meeting coincided with a warning that the cost of keeping Opel could run $1.45 billion higher than an “overly optimistic” projection prepared by GM in June GM, which emerged from bankruptcy under U.S. government ownership in July, has been in intensive negotiations with two bidders to sell control of Opel and its British affiliate, Vauxhall, since May.

But last month the newly appointed GM board declined to endorse a plan to sell the operations to a group led by Canadian auto-parts group Magna International that has the backing of Germany’s government.

Instead, the 13-member board asked GM management led by Chief Executive Fritz Henderson to return with more information on two alternatives to the Magna deal.

Specifically, the board asked for renewed consideration of a sale to Brussels-listed RHJ International or a third option that would see GM keep Opel by raising the billions of dollars needed for its restructuring, sources familiar with the deliberations have said.

In a report presented to the GM board, adviser KPMG said that GM would face “an additional cash need of up to $6.1 billion” to keep Opel.

GM had previously estimated that it would need $4 payday loans with no fax.65 billion in cash to keep Opel and repay a roughly $2 billion bridge loan from the German government, the report said.

A copy of the report was obtained by Reuters.

KPMG had no comment. A GM spokeswoman could not be reached for comment.

With some 25,000 German jobs directly at stake and an election looming at month end, the slow progress toward a resolution of the Opel situation has been met with mounting frustration by German government officials.

“‘We are keeping Opel’ is not a strategy yet,” German Deputy Economy Minister Jochen Homann said on the sidelines of an energy conference in Munich on Tuesday.

GM’s board of directors began a two-day meeting on Tuesday to discuss Opel, which ranks as the second-largest brand behind only Chevrolet for the still-struggling automaker.

Berlin wants a decision ahead of the Frankfurt car show starting next week, where Opel will unveil the latest version of its most important model, the Astra compact.

MAGNA CONCERNS LOOM

GM consented in May to a Magna deal but gradually retreated from that position after emerging on July 10 from a fast-track bankruptcy funded and sponsored by the U.S. Treasury. 

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