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GM dismisses Opel overture, auto aid calls mount
BERLIN/FRANKFURT (Reuters) - General Motors dismissed a surprise overture for its cash-strapped German unit on Wednesday as calls mounted for European governments to come to the aid of automakers hit by the global financial crisis.
German solar energy company SolarWorld shocked markets when it unveiled plans to bid for the German plants of GM unit Opel, vowing to turn the automaker into Europe's first "green" car company.
But GM, itself seeking a multibillion dollar bailout from the U.S. government, was dismissive of the takeover plan, which SolarWorld said was conditional on a complete separation of Opel from its parent company and on state guarantees from the German government.
"This is pure speculation. We are not going to comment on that. Opel is not for sale," said Karin Kirchner, a spokeswoman for GM Europe in Switzerland.
The SolarWorld announcement came days after Opel, which traces its roots back to 1899 and has been part of GM since 1929, announced it was seeking about 1 billion euros in aid from the German government because its financial situation was threatened by the troubles of its U.S. parent.
GM is lobbying Congress for government bridge loans to survive a sharp downturn in the sector that has hit manufacturers across the globe.
A proposed $25 billion bailout of U.S. automakers failed to make headway in the U.S. Senate on Tuesday despite warnings from Detroit's "Big Three" automakers -- GM, Ford and Chrysler -- that a failure to act could result in wholesale liquidation.
GM shares fell 14.2 percent to a 66-year low of $2.65 in early trading on Wednesday.
CALLS FOR EUROPEAN AID
Calls are also mounting in Europe for a broader plan to help the sector, although German Chancellor Angela Merkel has said Opel is a special case and dismissed the idea of an industry-wide rescue in Germany.
Senior EU officials told the European Parliament in Strasbourg on Wednesday that automakers needed help, with French Minister for European Affairs Jean-Pierre Joyuet saying Paris would ensure the bloc's leaders discussed the topic at a summit next month.
"Targeted and temporary measures to support European producers might be useful in part to increase technological and ecological performance," Joyuet said.
EU Industry Commissioner Guenter Verheugen, a German Social Democrat who has championed support for the sector, said Brussels expected 2009 to be a crisis year for the sector.
"The situation is clear, the automobile industry is a key industry, maybe the key industry. We have to champion sustainability of the industry," Verheugen said.
Opel employs about 25,000 workers in its German plants in Ruesselsheim, Bochum, Kaiserslautern and Eisenach.
With a federal election and a series of state votes looming in Germany next year, some politicians have broken with Berlin and called for broader aid.
Lawmakers in the west German state of Hesse cleared the way for Opel aid on Wednesday, empowering the state government to grant guarantees of up to 500 million euros to troubled firms.
In Berlin, the federal government said Economy Minister Michael Glos has written to EU Competition Commissioner Neelie Kroes, asking Brussels to loosen rules on state aid.
In the UK, car manufacturers are demanding access to the government funds meant for the rescue of the banking sector, in a bid to survive the financial crisis.
The woes of the world's automakers are beginning to have an impact on other industries. Chemical giant BASF cut its profit outlook for the second time in two months on Wednesday, citing a "massive" decline in key industries, especially autos.
The world's largest chemicals maker by revenue said it would temporarily shut 80 plants worldwide, and reduce production at about 100 others.
"In particular, customers in the automotive industry have cancelled orders at short notice," Chief Executive Officer Juergen Hambrecht said.
As new car sales continue their relentless slide, Toyota Motor Corp said it would stop production at all of its North American factories for two days next month, while rival Nissan Motor Co also renewed its pessimism over the industries near-term prospects.
SolarWorld said it was prepared to provide Opel with 250 million euros in cash and 750 million in bank credit lines subject to a guarantee from the federal government.
The company said it would also seek compensation payments for each of Opel's German workers totalling 1 billion euros -- matching the figure the car maker had said it would seek in state funding.
SolarWorld's announcement took Berlin by surprise and a government spokesman said there had not had any contact with the company's founder and Chief Executive Frank Asbeck.
Shares in the Bonn-based company, which Asbeck founded in 1998, fell by 11.5 percent to 14.45 euros by 1415 GMT.
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