It was a long meeting that lasted into the wee hours of the Thursday morning. It ended with the German government throwing insults at the US government. Everybody went home or to their presidential suites with a headache and no deal. If there is no further movement, Opel will go down the drain with GM by Friday.
Before the meeting, there were rumblings that wrinkles had to be ironed out in a trustee plan that was supposed to be the basis for bridge financing provided by the German government. The money was supposed to keep the lights on in Rüsselsheim, while the proper groom for Opel is being groomed.
Mice and men impacted with US government greed. Or lack of their usual largess.
According to Reuters, German Finance Minister Peer Steinbrück voiced his “surprises and disappointment” with the U.S. negotiators, after GM left participants flabbergasted by announcing it needed $415 million more in short-term cash. Berlin had offered a financing bridge worth $2.1 billion.
Financial Times says Guttenberg “was shocked by GM’s last-minute revelation at the beginnings of last night’s talks of additional €300 million financing.” After that, 8 hours of meeting went nowhere.
It wasn’t so much the additional number (less than a week’s worth of life support provided by the US taxpayer for GM.) It was the nerve. And it was the representative of the Department of Treasury who threw monkey wrenches (they just bought a lot of them) into the trustee model. They made him suffer for that.
Ohne trustee, Berlin doesn’t trust that their Euros won’t go down the black hole across the pond. Finance minister Steinbrück complained that very little information is being provided by the US Treasury. Guttenberg described the D.C. disclosure as “marginal, to put it politely.”
With gusto, Berlin seized the opportunity to blame the klutzy Amerikaner for causing a bankruptcy of Opel, the best laid plans of mice, men and the German electioneering notwithstanding. Experts, amongst them the respected Ifo Institute in Munich, had urged Berlin to get it over with, take Opel bankrupt and restructure. Not without reason, they point out the fallacies of supporting surplus production capacities with tax money. Ifo urged Berlin not to cave in to what Ifo called “blackmail.” But it’s an election year in Germany, and no politico wants to get caught doing something rash.
Payback time. Now, the buck can be passed to dollar-greedy DC:
“We have made demands on the U.S. Treasury and expect answers by Friday and we will need these answers in order to agree on a plan,” a visibly grumpy Economy Minister von und zu Guttenberg said. “We don’t have the security yet that we need to commit to bridge financing today.”
Harsher words weren’t spoken since “This time we mean it, that the deadline absolutely cannot be changed. After that things are automatically going to happen . . .” That sentence was cabled from Tokyo to the Japanese embassy in Washington on November 22nd,1941. And we all know what things happened two weeks after that.
Just this time, it will be Berlin bombing Rüsselsheim. And instead of “banzai!” it will be “Obama made us do it!”
To prepare the battlefield, insults are being hurled in the direction of D.C. by indignant participants of the all-nighter. Herr von und zu Guttenberg talked of a “partially bizarre night.” Steinbrück called the last-minute-demand for more moolah “impertinence.” Hesse’s premier Koch kvetched about a “not very helpful negotiation style of the American side.”
“The guy from Treasury is a nincompoop,” said Guttenberg. Or words to that effect. The blueblooded holder of the economy portfolio said it with more grace and a highly honed edge: “We would like to state that the U.S. Treasury could have displayed a little more care in choosing their representative.”
Klaus Franz, head of Opel’s works council, echoed the accusations of amateurish strongarming: “The German government is right in not allowing General Motors to blackmail it. It demands from GM to either pay for the additional financing need or to give a guarantee to cover it. General Motors has to know that Europe is no casino for gamblers. It is solely for General Motors to bear the blame, as they wanted to make us a puppet in the poker game about their bankruptcy.”
Now, another meeting has been scheduled for Friday. If no agreement can be reached by the week-end, “the danger of bankruptcy is very high,” several participants of the meeting opined to Der Spiegel. From the tone of their comments, hope for a hunky-dory outcome doesn’t seem to run high.
Anything else happened in the meeting? Not much. The suitors were whittled down to two and a half. To nobody’s surprise, the bidding battle for Opel has narrowed to a race between Fiat and Magna. Fiat and Magna were asked to do more homework and come up with sweeter deals. RHJ is definitely out. BAIC remains the dark horse. They weren’t officially disqualified from the race because it was determined that they never had officially entered.
The race for buying Opel and Vauxhall could still widen again to three as BAIC managers and advisors are set to meet the German government next week, Financial Times learned: “People close to the situation said that the Chinese carmaker still had a slim chance to enter the process and comb through the carmaker’s books if the government approved its takeover proposal.”