A top-level meeting on a rescue plan for troubled carmaker Opel was in jeopardy following the Italian carmaker Fiat pulling out over a dispute on financing, according a spokesman for Germany's Chancellor Angela Merkel.
With rival bidder Magna International Inc in talks with GM, Merkel spokesman Thomas Steg said lower-level German government official still planned to meet to review the state of negotiations.
He added however that a meeting with the chancellor, GM, Opel, US treasury and bidder representatives could only take place if "those involved ... have something substantial to produce, contracts that carry their signatures."
Steg said the government expected a letter of intent and to what extent those involved could produce this he could not say.
The German government is interested in an agreement that will shield Opel with 25,000 employees in Germany from a looming GM bankruptcy court filing and extensive restructuring. The developments in US have placed jobs in Germany at risk. The government is therefore looking to make Opel legally independent under a trustee and then provide bridge financing while Opel looks for a new permanent owner.
Italy's Fiat Group SpA and Canadian auto parts maker Magna are in competition for Opel as the German government looks to minimise job losses and expense to German taxpayers. GM and the US Treasury Department are also part of the negotiations.
But Fiat CEO Sergio Marchionne has refused to go along and said that his company would not be attending the talks scheduled for Friday. He cited unreasonable funding demands for not attending the talks but stressed that the company was not withdrawing its bid for Opel.
Wednesday's marathon talks with both Fiat and Magna led by Chancellor Angela Merkel had failed to reach an agreement on the future of the carmaker. Talks were to resume on Friday.
According to German officials GM had demanded short-term financing needs totaling €300 million on which they said the talks failed.
Meanwhile, according to media reports, Merkel has ruled out a direct state holding in Opel.
Magna has agreed to provide the additional funding even as Marchionne decided to pull out of talks over the issue.
Marchionne said it was unreasonable to expect Fiat to provide such funding without full access to Opel's financial records. He said in the absence of access to financial records it was not possible to present a proper merger proposal that would be fair to both sides.
The takeover of GM's European operations including Opel and Britain's Vauxhall is a key component of Marchionne's strategy for the car company with a capacity to produce 6 million cars a year, that he wants to create.
Fiat is in the final stages of acquisition of a 20 per cent stake in Chrysler, pending the completion of restructuring in bankruptcy court in New York.
Besides Germany and UK, Opel and Vauxhall also have operations in Belgium, Spain and Poland.
Meanwhile Italian prime minister Silvio Berlusconi said on Saturday that the German government was not giving any preferential treatment to Fiat in its takeover bid for GM's Opel unit.
He said the the German government was being totally impartial in the Fiat-Opel case.
According to government officials, Berlin will decide next week on which of the bidders is its preferred choice, but Canadian auto parts maker Magna is tipped to be in the lead position.