UPDATE 1-Fate of Opel remains open after Berlin meeting

* Committee made progress, ministry says

* Opel expects answer on aid by end of this month
(Adds ministry statement after meeting, previous FRANKFURT)

BERLIN, May 12 (BestGrowthStock) – A German committee that met on
Wednesday on the issue of state help to Opel made progress, the
Economy Ministry said, but it was unclear whether it would
support the aid request for the General Motors [GM.UL] unit.

Any decision on state aid is likely to be made by senior
members of the government, in conjunction with the states
affected by Opel’s restructuring. As many as 120,000 jobs in
Germany alone will be affected by the decision.

But the committee must first establish whether German
government officials find responses submitted by the company
sufficient before further decisions can be made.

The Loan Guarantee Committee met in the ministry to discuss
Opel’s request for 1.5 billion euros in state aid three days
after the ruling centre-right coalition suffered a bitter
defeat in a key regional election.

“The loan guarantee committee met today on the Opel
application and pressed ahead with the decision process,” the
ministry said, without giving any details on the talks.

Preconditions before Germany offers aid include proof that
the company fell into difficulty no earlier than the summer of
2008 as a direct result of the financial crisis, as well as
locating banks willing to finance the loans.

“PriceWaterhouseCoopers, the economics ministry’s own
independent expert, certified Opel was profitable until
September 2008 and moreover has a positive future thanks to its
new model range,” Opel deputy chairman Klaus Franz told
Reuters, warning that 120,000 jobs in Germany depended on the

“I await the outcome with both a great hope and great

Economics Minister Rainer Bruederle has often signalled his
reluctance to approve a federal contribution to any aid

Opel Chief Executive Nick Reilly, who expects a final
answer from Berlin by the end of this month, said on Friday
that generous contributions from other main Opel countries —
likely Spain and the UK — meant Germany might be on the hook
for less than 1.3 billion euros.


Reilly declined to provide specifics of the package, such
as which banks may have signed up to participate in the loan.

“We have made significant progress in this regard,” an Opel
spokesman said, referring to talks with lenders.

Ever since early November, when parent General Motors
[GM.UL] scrapped the sale of a majority stake in Opel to Magna
(MGa.TO: ) heavily favoured by Chancellor Angela Merkel,
relations between Berlin and Detroit have been frosty.

GM initially saw its funding responsibility to its European
subsidiary as completed once it paid back the remaining 600
million euros of an emergency loan from the German government,
which Detroit needed to do by the end of November to regain 65
percent of the shares held by a trustee.

Itself on life support since last June when Washington gave
it a $50 billion bailout, GM in March said it would commit 1.9
billion euros in loans and even fresh capital to Opel as it
became clear Berlin wouldn’t lift a finger following November’s
rift unless GM stepped up to the plate.

Investment Analysis

(Reporting by Christiaan Hetzner in Frankfurt and Gernot
Heller in Berlin; Editing by Gary Hill)

UPDATE 1-Fate of Opel remains open after Berlin meeting