GM ready to cede controlling stake in Opel: Report

BERLIN: US auto giant General Motors is ready to drop its controlling stake in its European unit Opel in exchange for a public guarantee for its activities in Europe, the Financial Times reported Monday.

The FT said GM was in talks with more than six financial and industrial groups about selling a stake in Opel and would like an indication of their interest within three weeks.

The report cited two people familiar with GM's plans.

It said GM, which is facing potential bankruptcy in the United States and is running short of cash in Europe, did not expect to make a profit on the sale but rather would invest the proceeds - at least 500 million euros (652 million dollars) - in Opel's operations.

In exchange, GM is seeking a pledge from several European states, led by Germany, for 3.3 billion euros in loan guarantees for the new subsidiary to insure its viability.

The new unit would likely have its headquarters in Germany and GM could retain a minority stake.

Germany has ruled out a bailout of Opel but said it would provide loan guarantees for a third-party investor.

The FT said Opel, which stated last week it has enough liquidity to stay afloat on its own for now, was trying to put up a firewall around its operations in case GM files for bankruptcy in the United States.

Like other automakers in Germany, Opel has weathered the economic crisis with the help of a German government programme designed to boost demand for cars by offering a bonus for people trading in their old cars and buying newer, more environmentally friendly models.