SolarWorld offers $1.3 Billion for GM's Opel

By George Frey

BERLIN -- German solar energy company SolarWorldsaid Wednesday it plans to offer 1 billion euros in cash and credit for some assets of car maker Adam Opel GmbH, the German subsidiary of financially strapped General Motors ( GM). GM said it wasn't selling.

Bonn-based SolarWorld said in a statement it was planning to offer GM 250 million euros ($350 million) in cash and another 750 million euros ($945 million) in credit lines in a bid for four German production facilities and Opel's Ruesselsheim development center and headquarters, to make it Europe's first true "green" auto company.

SolarWorld said any deal would be dependent on GM completely exiting the company. The parent company is seeking government loans and says it is running out of cash.

GM Europe spokeswoman Karin Kirchner said that "Opel is not for sale" and declined further comment, saying GM "wouldn't comment on speculation."

On Tuesday, Opel's supervisory board chief Klaus Franz, said it was unlikely that Opel would leave GM. "GM won't let us go," Franz said, noting that Opel is responsible for the development of 4 million GM cars a year.

On Monday, Franz and GM officials met with German government officials to discuss a 1 billion euro ($1.3 billion) loan guarantee. Chancellor Angela Merkel said then her government would decide on the matter by the end of the year, depending on how the situation unfolds at GM.

Meanwhile the Hesse state parliament announced Wednesday it had passed a law raising the level of potential state loan guarantees for companies like Opel and automotive suppliers to 500 million euros ($630 million) from 300 million euros ($380 million).

Hesse officials said 70,000 jobs in the state depend on the auto industry.

SolarWorld said it would develop a new generation of energy efficient and reduced emissions automobiles alongside successful models that Opel currently produces, should a deal work out.

"With the restructuring of the product pallet, the traditional German auto builder would offer in future especially electric and hybrid automobiles and the newest technology combining extended-range electric and combustion motors highly efficiently," SolarWorld said.

Tim Urquhart, an auto analyst with IHS Global Insight in London said he thought it was "highly ambitious and remarkable," and probably "difficult to pull off in the current environment."

"With a company with no track record in their history, it's unlikely," he said.

Urquhart said it would take "multiple billions" of euros to enter the automotive sector. Other companies that have tried to do so in the past have "fallen badly on their backsides."

The news sent shares of SolarWorld 19% lower to 13.20 euros ($17) in afternoon trading.

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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