General Motors Co. will cover a pledge to increase funding for the reorganization of its loss- making Opel unit with loans and a deposit guarantee, GM's German-aid application shows.
GM won't provide Opel with additional cash and will instead give two loans totaling 1.06 billion euros ($1.3 billion) and provide 245 million euros of collateral for government aid to reach the 1.9 billion euros it has offered, according to a PricewaterhouseCoopers report commissioned by the German government that was obtained by Bloomberg News.
GM tripled its contribution in March, without saying how it would meet the obligation, after European governments pushed the carmaker to give more than the original 600 million euros in equity it had pledged. German lawmakers are wary of granting GM money after Chancellor Angela Merkel blamed her party's setback in state elections this month on Greek loans.
"I'm very skeptical about GM's request for state aid," Joachim Pfeiffer, parliamentary spokesman on economic policies for Merkel's Christian Democratic Union, said in a telephone interview. "We need to look at it very carefully, but it's clear that GM definitely has enough cash to restructure Opel by themselves."
GM is pursuing aid from Germany and other European nations, even after posting first-quarter net income of $865 million, as part of a plan to revive Ruesselsheim, Germany-based Opel by building new models and expanding to additional markets.
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