GM’s Bankruptcy Fears Continue

General Motors Corp. (GM) reportedly found a buyer for its majority stake in German unit Opel a day after the struggling automaker said it does not plan to repay a $1 billion debt due June 1.

Citing sources familiar with the matter, German magazine Der Spiegel reported that Fiat SpA was close to a deal to buy a large chunk of GM’s European business. The Italian carmaker is already in talks to buy a stake in Chrysler LLC with an April 30 deadline for the transaction.

A unit of Canadian auto parts manufacturer Magna International Inc. (MGA) is also reported to have shown interest in the Ruesselsheim-based Opel. However, none of the parties confirmed these reports.

GM needs to sell a large stake in Opel to get about $4.30 billion in German government loan guarantees to keep the unit afloat. The Detroit auto giant also needs to persuade bondholders to restructure $27.5 billion in unsecured debt to avoid bankruptcy filing.

Earlier this week, the company had said it would temporarily idle most of its U.S. factories and lay off another 1,600 employees. Although GM does not have a large impact on the market, its bankruptcy filing could have broader ramifications for the economy. Shares of the company were down more than 3% to $1.63 in morning trade on the New York Stock Exchange.

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