Support from 2 German states seals deal for Opel
- Source: Shanghai Daily
- [15:12 June 01 2009]
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By David Rising
Two German states yesterday agreed to support a 1.5 billion euro (US$2.11 billion) bridge loan for General Motors Corp's Opel unit, putting the final touches on a deal with Canada's Magna International Inc to acquire the auto maker.
Under the deal, pushed through to protect Opel before GM's likely bankruptcy filing today, Magna will take a 20 percent stake in Opel and the Russian-owned Sberbank will take a 35 percent stake, giving their consortium a majority. GM will retain a 35 percent holding, while the remaining 10 percent will go to Opel employees.
"The time of uncertainty is over," North Rhine-Westphalia Governor Juergen Ruettgers said of the deal. "The main components of Opel's future remain in Europe."
The German government and four state governments where Opel has operations have now pledged to provide a 1.5 billion euro bridge loan for the deal, part of which will be available immediately.
Following agreement on the plan early Saturday after talks through the night, the governors of Thuringia and Rhineland-Palatinate immediately approved their respective shares of 52 million euros and 100 million euros.
The state parliaments in Hesse and North Rhine-Westphalia, where coalition governments are in control, voted yesterday to approve their respective shares of 447 million euros and 150 million euros.
"We've decided that there is to be a new European company," Hesse Governor Roland Koch said. "I think that for Opel and its employees it is an unbelievable chance."
Opel employs 25,000 people in Germany, nearly half of GM Europe's workforce.
As part of the deal, all four plants in Germany would stay open, though Magna previously has said it would need to shed some 2,600 jobs.
German government officials said Magna's plan anticipated between 7,500 and 8,500 job cuts across Europe.
Opel and British brand Vauxhall have operations in Belgium, Spain and Poland among other countries.
The agreement with Magna, based in Aurora, Ontario, puts Opel under the care of a trustee, designed to shield it from GM's likely bankruptcy.
Germany had stressed the need for a trustee to ensure taxpayer assistance does not flow to GM stake holders in the United States.
Other GM Europe assets, including Vauxhall and its plants, were consolidated under the Adam Opel GmbH before the deal and will also enter the trusteeship.