Fiat would not run up debt in deal

BERLIN (AP) — Fiat Group SpA aims to take over General Motors Corp.’s main European unit without running up debt in a deal that could require billions of euros in government loan guarantees, Germany’s economy minister said Monday.

Fiat’s concept — part of a wider plan to build a global powerhouse also including Chrysler — foresees keeping the Opel brand and the unit’s three assembly plants in Germany, Economy Minister Karl-Theodor zu Guttenberg said after meeting Fiat CEO Sergio Marchionne.

However, he said there would be a “need for consolidation” and made clear that the future of an engine plant in Kaiserslautern, Germany, would be in doubt.

Asked what the plan might mean overall in terms of job losses or plant closures, Guttenberg said Marchionne “hasn’t offered any specific numbers yet, but he described them as not being too dramatic.”

GM has been trying to find investors for noncore and unprofitable assets to help stave off collapse.

In an interview Monday with The Associated Press, GM CEO Fritz Henderson confirmed that the company is negotiating with Fiat about its European operations and said the talks mainly are focused on the Opel and Vauxhall brands.

“We are talking to them, amongst other parties. Not solely Fiat, but several parties who have an interest in making investment in our European business,” he said.

Germany and others are keen to safeguard the future of its European operations, which employ some 54,500 people.

Guttenberg said that “Fiat wants to get into this deal without debts of its own.”

He said the Turin, Italy-based company estimates the short-term financing needs — stemming from GM’s debts and pension obligations — at some $6.6 billion to $9.3 billion Europe-wide, which could be covered by loan guarantees from various governments.

Adam Opel GmbH employs about 25,000 workers in Germany. It and its sister brand Vauxhall also build cars in countries including Belgium, Poland, Spain and Britain. GM’s European operations include Sweden’s Saab, which also is expected to be part of any deal.

GM CEO Henderson said it wouldn’t be appropriate for him to discuss Fiat’s interest in Saab, but said GM has a “panoply” of investors interested in the struggling Swedish brand.

In Stockholm, government spokeswoman Karin Flygare said the Swedish government has also been in contact with Fiat, but she declined to elaborate.

Guttenberg described Fiat’s proposal as “interesting” but stressed that the government would have to examine it further. Last week, he met with Canadian car parts maker Magna International Inc., which also has expressed an interest in taking a stake in Opel.

Guttenberg noted that Marchionne’s proposal is part of a Fiat plan to put together the biggest European auto maker and the world’s No. 2.