Deal struck to save Opel

• Source: Xinhua
• [09:40 May 31 2009]
• Comments

A visitor views an Opel car at the exhibition hall of Opel auto in Berlin, Germany, May 30, 2009. A deal has been reached for the Canadian auto parts maker Magna to take over General Motor's Opel. (Xinhua/Luo Huanhuan)

The 25,000 employees of German carmaker Opel can breathe a sigh of relief: The German federal government, Opel's parent company General Motors (GM), Canadian auto parts maker Magna and the US Ministry of Finance struck a deal early on Saturday to save the company after over-night marathon talks at German Chancellor Angela Merkel's office.

Finance Minister Peer Steinbrueck and Economy Minister Karl-Theodor zu Guttenberg told journalists shortly after 2 am (0100 GMT) that a deal had been struck.

"I can tell you that a deal has been reached," Steinbrueck said.

 The agreement includes three main points: The German government approves Magna's takeover of Opel, Opel will be put under the care of a trustee, and the German government will provide a 1.5-billion-euro (2.1 billion-US dollar) bridging loan to Opel.

The German government had been pursuing ways to prevent Opel from being dragged into bankruptcy by its owner GM, which is expected to seek bankruptcy protection early next week.

As early as last year, Opel had requested a bridging loan from the German government, but was denied.

The government, in a bid to save jobs at Opel, had held frequent talks with GM and the US government, and Steinbrueck himself had flown to the United States to seek solutions.

The over-night talks were the second this week between key government ministers, GM and Magna after the Italian auto giant Fiat withdrew its bid for Opel on Friday.

Fiat complained it faced "unreasonable" funding demands from the German government.

"You can be sure that we have reached a decision which was not easy," Steinbrueck said.

"All participants were aware of the risks, but these risks were also weighed against the risks... in the event of Opel's bankruptcy, and what the consequences would be," Steinbrueck said.