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Germany approves Magna bid for Opel
May 31, 2009, Sunday
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GERMANY'S finance minister said that a plan was approved for Canadian auto parts maker Magna International Inc to move ahead with a rescue of General Motors Corp's Opel unit.
Peer Steinbrueck said the agreement was reached early yesterday in Berlin after the second round of high-level talks in as many days.
"A solution has been found to keep Opel running," Steinbrueck said. "You can be sure that we did not take the decision lightly. All the federal and state representatives are aware there are some risks."
The agreement will see Adam Opel GmbH put under the care of a trustee, shielding the German auto maker from GM's likely bankruptcy protection filing early next week.
The German government and several state governments will provide a 1.5-billion-euro (US$2.1 billion) bridge loan, part of which will be available immediately. Parliamentary committees in two states, Hesse and North Rhine-Westphalia, must still approve the financing. That is expected today.
Siegfried Wolf, a co-CEO of Magna, said he expected the agreements with GM would be signed in five weeks time, but insisted that the deal struck early yesterday would prevent Opel from being touched by whatever will happen to GM.
"We really have taken the risk that was necessary to show a commitment, and we are committed, otherwise we wouldn't have done this deal," Wolf said.
Under the deal, Magna will take a 20 percent stake in Opel and Russian-owned Sberbank will take a 35 percent stake, giving their consortium a majority. GM will retain a 35 percent holding, while Opel employees will get the remaining 10 percent.
The consortium plans to work together with Russian car maker Gaz to produce more than 1 million vehicles in Russia and Eastern Europe.
As part of the deal, all four factories in Germany will remain in operation, although Magna has previously said it will need to cut some 2,500 jobs.
German Chancellor Angela Merkel called the second round of negotiations after talks snagged on Thursday over new short-term funding needed to move Opel into an independent legal structure.
The other suitor for Opel, Fiat Group SpA, skipped the talks, saying it faced "unreasonable" funding demands.
Germany had sought an agreement that would shield Opel - which employs 25,000 people in Germany - from a looming GM bankruptcy court filing in the United States.
Peer Steinbrueck said the agreement was reached early yesterday in Berlin after the second round of high-level talks in as many days.
"A solution has been found to keep Opel running," Steinbrueck said. "You can be sure that we did not take the decision lightly. All the federal and state representatives are aware there are some risks."
The agreement will see Adam Opel GmbH put under the care of a trustee, shielding the German auto maker from GM's likely bankruptcy protection filing early next week.
The German government and several state governments will provide a 1.5-billion-euro (US$2.1 billion) bridge loan, part of which will be available immediately. Parliamentary committees in two states, Hesse and North Rhine-Westphalia, must still approve the financing. That is expected today.
Siegfried Wolf, a co-CEO of Magna, said he expected the agreements with GM would be signed in five weeks time, but insisted that the deal struck early yesterday would prevent Opel from being touched by whatever will happen to GM.
"We really have taken the risk that was necessary to show a commitment, and we are committed, otherwise we wouldn't have done this deal," Wolf said.
Under the deal, Magna will take a 20 percent stake in Opel and Russian-owned Sberbank will take a 35 percent stake, giving their consortium a majority. GM will retain a 35 percent holding, while Opel employees will get the remaining 10 percent.
The consortium plans to work together with Russian car maker Gaz to produce more than 1 million vehicles in Russia and Eastern Europe.
As part of the deal, all four factories in Germany will remain in operation, although Magna has previously said it will need to cut some 2,500 jobs.
German Chancellor Angela Merkel called the second round of negotiations after talks snagged on Thursday over new short-term funding needed to move Opel into an independent legal structure.
The other suitor for Opel, Fiat Group SpA, skipped the talks, saying it faced "unreasonable" funding demands.
Germany had sought an agreement that would shield Opel - which employs 25,000 people in Germany - from a looming GM bankruptcy court filing in the United States.
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