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Jun 23, 2009, 8:48 GMT

GM reportedly demands Opel buyback option

Frankfurt - US car giant General Motors (GM) is reportedly demanding a buy-back option in negotiations over the sale of its European subsidiary Opel, German daily Frankfurter Allgemeine Zeitung (FAZ) wrote on Tuesday. FAZ reported that GM was insisting on the option to buy back Opel at a future date, as a condition of the sale being brokered by a German state-controlled trust company, according to sources close to the negotiations. This would make Opel far less attractive to the favoured bidder, Canadian car parts manufacturer Magna, as GM could one day hope to harvest the fruits of a successful Opel restructuring, FAZ reported. For this reason, Magna would refuse to accept such a buy-back option, inside sources said. However the issue was not seen as a deal-breaker. Opel is currently majority owned by a German state-controlled trust company, which holds 65 per cent of the carmaker. The remaining 35 per cent is still in GM hands. By mid-July, GM hopes to finalize the sale of 55 per cent of Opel to Magna and its Russian partners, state-owned Sherbank and carmaker GAZ. A further 10 per cent of the company is to be acquired by Opel employees. The German government has sweetened the Magna deal with state aid and a multi-billion-dollar bridging loan, in an effort to save Opel from being swallowed up by the insolvency of GM, which employs 55,000 people at its European works.

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