New Doubts Raised on Opel Rescue Bids

The future of General Motors' (GM) European subsidiaries, including its Vauxhall plants at Ellesmere Port and Luton and Opel factories in Germany, was thrown into confusion when a German minister floated the possibility that none of the bids on the table for the business might succeed.

A week before its American parent company has to either raise cash by selling the European operations or file for bankruptcy, Karl-Theodor zu Guttenberg, the economic affairs minister, told Bild am Sonntag newspaper: "We now have three offers for an Opel takeover, but that doesn't mean one of them will automatically come to fruition.

"We must first have a high degree of certainty that the significant tax money we will have to provide is not lost. None of the three offers so far provides this certainty in a sufficient way." He added: "If these deficits were to remain, an orderly insolvency would clearly be the better solution – it also could open opportunities for the future of Opel."

Bids have been tabled by the Fiat (FIA.MI) group, the Canadian car parts maker Magna International (MGA), in partnership with Russia's Sberbank (SBER.RTS) bank, and the New York-based private equity investor Ripplewood Holdings LLC. But the German government could instead put the Opel unit into a trusteeship if GM files for bankruptcy, and this week organized a €1.5bn bridging finance package to keep Opel running.

Such a solution would be extremely messy, as it would mean separate administration procedures throughout the EU, and supplier agreements in receivership to keep the closely integrated businesses running. GM Europe has major manufacturing operations in Germany, Spain, Britain, Sweden, Belgium, Poland and Hungary.

Mr Guttenberg's remarks come ahead of a crucial meeting on Friday, convened by the German Chancellor Angela Merkel, where regional ministers from the federal government will evaluate the three bids.

Germany's ruling coalition of the Christian Democratic Union (CDU) and the Social Democratic Party (SPD) is divided over which bid to favour, with CDU members such as Mr Guttenberg said to favour the Fiat bid or allowing GM Europe to go onto bankruptcy. But many senior SPD figures, who are traditionally closer to the trades unions, tend to sympathise with Magna International's offer, because it has pledged to keep open all GM plants in Germany.

Frank-Walter Steinmeier, the foreign minister and SPD candidate for the chancellorship in this year's elections, hit back at Mr Guttenberg, yesterday, saying: "I advise everybody finally to stop the talk about an Opel insolvency. We should focus all our energy on saving as many jobs as possible at Opel instead of raising new spectres."

Over the weekend, Fiat chief executive Sergio Marchionne said that "in the worst case, a maximum of 2,000 jobs in Germany would be affected" by the planned integration. The implication there is that the UK operations, especially the Vauxhall van factory at Luton, will bear the brunt of the pain.

GM Europe is a complex operation. Indeed, despite Opel's dominance, GM's Spanish subsidiary makes almost as many vehicles and the UK is GM's strongest market in Europe.

Separate talks about the sale of Saab of Sweden are also proceeding. There is speculation that GM could even keep its Vauxhall arm, integrating it instead with its US and Korean factories, to spearhead a new GM Europe. In any case, disentangling the legal ownership of GM's various patents, brands and facilities could take many months.