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Crunch time nearing for GM Europe Crunch time nearing for GM Europe
(11 minutes later)
The German government will meet later on Wednesday to decide which of the four bidders for General Motors Europe it will back with loan guarantees.The German government will meet later on Wednesday to decide which of the four bidders for General Motors Europe it will back with loan guarantees.
Owner General Motors will have the final say, but the German government's backing is crucial, as GM would struggle to find a buyer without it.Owner General Motors will have the final say, but the German government's backing is crucial, as GM would struggle to find a buyer without it.
Berlin's choice will have implications for Opel and Vauxhall workers. But a spokesperson for UK Business Secretary Lord Mandelson said GM wanted to keep talking with all bidders.
All had committed to maintain Vauxhall production in the UK, he added.
The future of GM in the US is also in doubt as bondholders have yet to reach agreement over a debt-for-equity swap.The future of GM in the US is also in doubt as bondholders have yet to reach agreement over a debt-for-equity swap.
Bidding warBidding war
German Chancellor Angela Merkel will be meeting GM representatives, US government officials and domestic regional leaders.German Chancellor Angela Merkel will be meeting GM representatives, US government officials and domestic regional leaders.
Her government is being asked to put up hefty loan guarantees for the winning bidder for GM Europe, so its backing could sway US parent GM's ultimate decision on who to sell to.Her government is being asked to put up hefty loan guarantees for the winning bidder for GM Europe, so its backing could sway US parent GM's ultimate decision on who to sell to.
This is because Opel has its headquarters in Germany, and 25,000 of the firm's 50,000 workers are employed in the country.This is because Opel has its headquarters in Germany, and 25,000 of the firm's 50,000 workers are employed in the country.
The four bidders for GM Europe are Italy's Fiat, Canada's Magna, Belgium's RHJ and China's Beijing Automotive Industry Corporation (BAIC).The four bidders for GM Europe are Italy's Fiat, Canada's Magna, Belgium's RHJ and China's Beijing Automotive Industry Corporation (BAIC).
With an election looming, Berlin does not want to see too many job losses arising from the takeover.With an election looming, Berlin does not want to see too many job losses arising from the takeover.
Magna says it will lay off 2,500 workers in Germany, while Fiat says it will cut 2,000 jobs.Magna says it will lay off 2,500 workers in Germany, while Fiat says it will cut 2,000 jobs.
BAIC, however, says it will not cut any jobs for at least two years.BAIC, however, says it will not cut any jobs for at least two years.
But the takeover will also affect 5,000 Vauxhall workers at plants at Ellesmere Port and Luton in the UK.But the takeover will also affect 5,000 Vauxhall workers at plants at Ellesmere Port and Luton in the UK.
The UK government has said it might consider making a financial contribution to help secure the future of Vauxhall.The UK government has said it might consider making a financial contribution to help secure the future of Vauxhall.
US bondholdersUS bondholders
GM faces a 1 June deadline to either restructure its debt or file for bankruptcy.GM faces a 1 June deadline to either restructure its debt or file for bankruptcy.
It has been trying to do a deal with bondholders, under which they would trade in $27bn in debt for a 10% stake in the recapitalised company.It has been trying to do a deal with bondholders, under which they would trade in $27bn in debt for a 10% stake in the recapitalised company.
The majority of bondholders have been against the deal from the start, believing that the stake being offered is too small.The majority of bondholders have been against the deal from the start, believing that the stake being offered is too small.
An announcement on the outcome of the negotiations is expected later on Wednesday, but failure to secure a deal could see the troubled carmaker forced into bankruptcy.An announcement on the outcome of the negotiations is expected later on Wednesday, but failure to secure a deal could see the troubled carmaker forced into bankruptcy.
"It's still possible that President Obama's motor industry task force, which has been handling all the talks, will offer bondholders a bigger stake in GM as a last-minute sweetener," said BBC North America business correspondent Greg Wood."It's still possible that President Obama's motor industry task force, which has been handling all the talks, will offer bondholders a bigger stake in GM as a last-minute sweetener," said BBC North America business correspondent Greg Wood.
"But the smart money is on bankruptcy.""But the smart money is on bankruptcy."
A deal brokered on Tuesday with the Canadian Auto Workers Union to reduce labour costs means that bondholders may be able to take a greater stake.A deal brokered on Tuesday with the Canadian Auto Workers Union to reduce labour costs means that bondholders may be able to take a greater stake.
GM has been hit hard by a slump in sales during the economic downturn and has taken billions of dollars in state aid in order to stay afloat.GM has been hit hard by a slump in sales during the economic downturn and has taken billions of dollars in state aid in order to stay afloat.