Germany in deal with Magna, GM to save Opel
Berlin, May 30, 2009
Germany reached a landmark deal with Canadian auto parts group Magna, General Motors and governments to save carmaker Opel from the imminent bankruptcy of its US parent, German leaders said on Saturday.
Finance minister Peer Steinbrueck told journalists waiting outside chancellor Angela Merkel's offices for the six-hour meeting that a comprehensive deal had been agreed.
"I can tell you that a deal has been reached," Steinbrueck said shortly after 2 am. He added that the deal included bridge financing for Opel worth $1.5 billion euros ($2.1 billion) and a trustee model for the German carmaker.
Siegfried Wolf, the co-chief executive of Magna, cautioned there were still details to be ironed out.
"In five weeks' time we should have the formal signing of the contract," he said.
Hesse state premier Roland Koch said, for example, the state assemblies in both Hesse and North Rhine-Westphalia - two of four states with Opel plants - would still have to endorse it. He said he hoped that could be completed by Sunday.
Leaders of all four states have endorsed the deal. Steinbrueck said US treasury representatives at the meeting had also endorsed the agreement.
Economy minister Karl-Theodor zu Guttenberg renewed his reservations about risks involved with the rescue but added there would also have been risks if Opel declared bankruptcy.
Magna and Opel had presented their plan to senior German officials and representatives of the US Treasury to win their support and ensure the release of the financing that Opel desperately needs to survive over the coming months.
An agreement between GM and Magna is a first step toward securing the future of Ruesselsheim-based Opel, which has been under GM's control for the past 80 years and traces its roots in Germany back to the 19th century.
"I think this is the start of a new future for Opel, for the workers, the company and the brand," GM Europe head Carl-Peter Forster told journalists. He added, however, that there would still be some hard negotiations on the fine-print ahead.
The German government has been scrambling to safeguard Opel's future before GM files for bankruptcy, a step which is expected to come by Monday.
A first round of talks in Berlin collapsed amid mutual recriminations on Thursday morning, prompting the German government to set a new round of negotiations for Friday.
Italian carmaker Fiat, Magna's main rival in the battle for Opel, pulled out of talks, leaving the door open for Magna, a company that was started by Austrian emigre Frank Stronach in a Toronto garage nearly half a century ago.-Reuters