The late night talks in Berlin for the revival of beleaguered Adam Opel GmbH, which is facing bankruptcy, broke down today morning as Opel demanded for an immediate bridge loan of 300 million euros ($415 million) from the German government.
It is also reported by BBC that one of the bidders has pulled out, leaving Fiat and Canada's Magna in the fray.
A decision over Opel has been delayed to Friday, German economics minister Karl-Theodor zu Guttenberg told reporters after late night negotiations in Berlin that dragged on into the early hours of Thursday.
German finance minister Peer Steinbrueck said GM, Opel's parent, presented a new cash demand, adding that the exact purpose for any German state aid has to be transparent.
"This wasn't the case...We can't accept that, because we need security," he said.
Steinbrueck said, however, that there is "reasonable hope" that a decision on bridge financing for Opel could be made on Friday.
Meanwhile, German chancellor Angela Merkel met with key cabinet ministers, governors of the German states with Opel plants, representatives from parent GM and the US Treasury, as well as executives from the bidders for Opel.
The meeting was overshadowed by a rift between the ruling coalition parties, with the Social Democrats appearing to be ready to bail out Opel at any cost to safeguard jobs. Zu Guttenberg, however, early Thursday reiterated that an orderly insolvency remains an option as a final resort.
Gutternberg on Sunday said: "If the shortcomings are not lifted, then controlled insolvency would clearly be a better solution. It, too, could open possibilities for Opel's future." (See: Opel bankruptcy may be best course of action: German economy minister).
Magna founder and chairman Frank Stronach said in Berlin he was upbeat about Opel's potential, adding that Magna would be willing to help finance GM's extra cash demand.
"But if we sign the contract and (GM) breaches it, we would expect the German government to support us...in getting the money back," Stronach said.
"Opel has always been somewhat restricted, because they weren't free," he told reporters on the sidelines of the meeting. Stronach said he believes Magna "could run Opel as a world brand".
According to previous statements, Magna's consortium plans an initial investment around 700 million euros. Under the plan, which is backed by Opel's works council, GM would retain a 35 per cent stake in the company. Sberbank would take a 35 per cent stake as well, with Magna holding 20 per cent and Opel's employees with 10 per cent
GM, whose parent company in Detroit faces a June 1 deadline to restructure itself or file for bankruptcy. is surviving on $13.4 billion of US aid and seeking another $16.6 billion. (See: GM working overtime to meet bankruptcy deadline).