General Motors company Opel doesn’t appear to be getting the funding that they will need. Germany is seeking new sources of funding for the company, but the country will officially reject a state-aid request, according to Automotive News.
Chancellor Angela Merkel is opposed to granting Opel aid from the government rescue fund. The fund was set up to distribute loans and assistance to companies that are affected by the economic downturn. That being said, Germany is still seeking to help Opel. One option includes asking the European Investment Bank for funding.
A steering committee for aid assistance will reject the GM’s application for 1.1 billion euros in federal and regional loans. Part of the reason for this rejection is because GM has enough cash to restructure Opel and the downturn of the company was caused by model failures in the U.S, not by the financial crisis.
The committee will meet again later today.
In total, GM is looking for 1.92 billion euros in aid from European countries. The aid will help GM reorganize Opel, which will include shutting down a plant in Antwerp, Belguim. The closing of the factory would eliminate 8,300 jobs.
Europe was the only region where GM posted a loss in profit in the first quarter, as the company posted an $865 million net profit in total.
“The first responsibility for Opel very clearly rests with GM,” Economy Minister Rainer Bruederle told German public broadcaster ARD television, adding that GM has about 10 euros in free liquidity after fully paying back credits from U.S. and Canadian governments. “GM is able to reorganize itself through its own funds.”
Spain has already granted Opel the funds they will need.