Minister: Germany Looking at Opel′s Request for Loan Guarantees | Business| Economy and finance news from a German perspective | DW | 15.11.2008
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Minister: Germany Looking at Opel's Request for Loan Guarantees

Germany is examining Opel's request for government credit guarantees, Finance Minister Peer Steinbrueck said. Like others in the industry, the German carmaker has been forced to temporarily close factories to cut costs.

Opel factory

Opel's parent company GM is seeking a government bailout in the US

"We are looking into it to see whether it's appropriate," Steinbrueck said Friday, Nov. 14, in Washington on the sidelines of the Group of 20 summit of developed and emerging economies.

Opel -- a unit of General Motors Corp, which itself is seeking a US government bailout -- said earlier Friday that it wanted the loan guarantees from German federal and state governments after a sharp downturn in orders but insisted it did not need cash injections.

The German-based carmaker did not name a sum for the guarantees it wanted, but Kurt Beck, the prime minister of the western state of Rhineland-Palatinate, said it was about 1 billion euros ($1.27 billion).

Steinbrueck said a meeting between Opel representatives and the four states where Opel has factories would take place Tuesday, adding that the talks were still at an initial stage.

The state government of Hesse and Rhineland-Palatinate have already signalled that they could take part in the loan guarantees.

"No liquidity problems"

Hans Demant, vice president of GM Europe, said Opel was only requesting credit guarantees. "At this time, we have no liquidity problems," he said.

An Opel spokesman said the company would only make use of the guarantees if the situation of its parent company deteriorated to the point that production and project development at its German subsidiary was affected.

General Motors, the world's biggest carmaker, is struggling to stay afloat because of a massive slump in sales triggered by the ongoing financial crisis.

Opel, which employs 25,700 workers, and other German carmakers, such as Daimler and BMW, have announced temporary closures of factories to cut costs after a huge drop in orders.

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