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Germany May Provide Opel With Bridge Financing

The Associated Press

BERLIN -- Germany could provide any new investor in the Opel unit of General Motors (GM Quote) bridge financing of 1.5 billion euros ($2.09 billion), Finance Minister Peer Steinbrueck said Wednesday ahead of top-level meetings on the future of the automaker.

Italy's Fiat, Canadian auto parts maker Magna International (MGA Quote) and U.S. investment firm Ripplewood Holdings all have been pursuing bids for Opel.

There also are reports that carmaker Beijing Automotive Industry Holding, a Chinese automaker, had submitted an offer to buy the Opel unit.

Meanwhile, GM Europe said Wednesday that assets of its Opel and Vauxhall brands are being consolidated under the ownership of the Opel unit to prepare for an investor to acquire the company.

GM Europe spokeswoman Karin Kirchner says the factories, patents and other assets of the German and British brands are being consolidated debt-free "under Adam Opel GmbH, which belongs 100% to GM."

Kirchner said the move approved Wednesday by Opel's supervisory board would prepare Opel and sister company Vauxhall for a sale.

Kirchner said: "This way it can join a partnership with a potential investor. You have one company that would be invested in or would sell a stake."

German Chancellor Angela Merkel planned meetings later in the day to bring together German and U.S. officials with GM representatives and Opel's potential suitors as pressure builds for a decision on its future.

Speaking on ARD television ahead of the meetings, Steinbrueck said there was a "very good chance" that the federal government would have to step in with bridge financing to help keep Opel running after an investor was found.

"There are three questions today: Which investor would we prefer? How would a trust model look? And that leads to the question of bridge credit in the order of 1.5 billion euros" Steinbrueck said.

He added that any investor would likely be looking also for middle-term support from the government. In addition to bridge financing, German officials have previously said the country likely will have to support a new owner with loan guarantees, and have supported an ownership structure separate from GM to ensure that taxpayers' money does not get drawn into U.S. bankruptcy proceedings.

"There are a number of other factors that first need to be clarified -- probably this evening," Steinbrueck said.

U.S. parent GM faces a June 1 deadline to restructure or file for bankruptcy.

Late Tuesday, Germany's ZDF television reported that moves toward a financial and legal separation of GM and Opel were well advanced. Asked about that in a ZDF interview, employee council chief Klaus Franz replied: "I can confirm that. I have seen the contract ... it looks very good and everything is going in the right direction."

Opel employs some 25,000 people in Germany, nearly half of GM Europe's total work force. With elections looming in September, Berlin is keen to save as many jobs as it can.

Wednesday's evening meetings in Berlin are expected to include Cabinet ministers; governors of the four German states that have Opel plants; top officials from Fiat, Magna and possibly Ripplewood; and representatives from GM, GM Europe and the U.S. Treasury Department.