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Germany Wants More Cash from Opel Bidders

Germany's economy minister has indicated that takeover plans for the struggling European car manufacturer, Opel, are still some way from being completed and that rival bidders must stump up more capital. "There are still lots of question marks: for example the bidders have to ensure that the new Opel company can start with a strong capital base," Karl-Theodor zu Guttenberg told the Sunday newspaper, Frankfurter Allgemeine Sonntagszeitung. "That means that the bidders have to be ready to take on more risk themselves. Otherwise the EU Commission will not accept the rescue," said Mr zu Guttenberg in an interview. Canadian auto parts supplier Magna ( (MGA)), Belgian investment holding RHJ and Beijing Automotive ( (BAIC)) are currently in a three-horse race to take over the firm from its US owner General Motors which recently said final bids must be in by close of business Monday (20 July). GM says it will then share its preliminary findings on the final bids later in the week with Germany and other European governments who are set to provide billions of euros in loans and guarantees to assist the takeover process and help save European jobs. Rival bids Until now, Magna has been seen as the frontrunner although recent entrants in the bidding race, BAIC and RHJ, are looking for €2.64 billion and €3.8 billion in state aid respectively, considerably less than the €4.5 billion Magna is seeking. However Mr zu Guttenberg indicated the size of the state aid requested would not be the only deciding factor when Berlin—which is set to put up the largest amount of money—decides which bidder it favours. "That's too simple. What good is an offer that is cheap (to the taxpayers) if the return of the money is in question. The key will be if a concept is so sustainable that there is a high probability that the interest, fees and the money can be paid back," he said. Magna teamed up with state-owned Russian bank Sberbank and automaker GAZ in May to win initial support from the German government to take a stake in the European car company. But relations between Opel's owner GM and Magna have soured in recent weeks, opening the door for rival bidders BAIC and RHJ. RHJ has also been quick to engage with other European countries that contain GM plants aside from Germany. Job losses? Of the European governments involved, Germany has dominated takeover talks so far as 25,000 of GM's 54,500 European workers are based in the country. In the UK, roughly 5,500 workers currently work for Vauxhall, another of GM's brands in Europe. London has shown concern that German support for Opel could result in UK jobs being axed instead, whereas Belgium has similar worries over the Opel plant in the country's northern region of Flanders. A new slimed-down GM recently emerged from bankruptcy proceeding in the US having lost billions of dollars from the economic downturn.

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