VARIOUS: Germany agrees deal to shield Opel from GM bankruptcy

Record ID: 479174

  • Title: VARIOUS: Germany agrees deal to shield Opel from GM bankruptcy
  • Date: 31st May 2009
  • Summary: ANTWERP, BELGIUM (MAY 30, 2009) (REUTERS) OPEL INSIGNIA ON CAR AND PARKING LOT NEW OPEL CARS LINED UP AT FACTORY PARKING OPEL CARS AT PARKING NEW OPEL CARS LINED UP AT FACTORY PARKING
  • Embargoed: 15th June 2009 13:00
  • Keywords:
  • Topics: Finance
  • Reuters ID: LVAE8TG4Y0XNE59SJVEK4A458ETJ
  • Story Text: Germany heaved a sigh of relief on Saturday (May 30) over a deal with Canadian auto parts group Magna, General Motors and the U.S. government to save carmaker Opel from the imminent bankruptcy of its U.S. parent.
    The accord, sealed after six hours of talks in Chancellor Angela Merkel's offices, still needs final approval but seemed set to ringfence Opel and its 50,000 workers in Europe from a GM Chapter 11 bankruptcy filing widely expected for Monday (June 1).
    Merkel said U.S. President Barack Obama -- due to visit Germany next week -- helped swing the deal with a telephone call on Friday (May 29). That helped clear hurdles over financing that had threatened to scupper the entire transaction.
    Based in Ruesselsheim near Frankfurt, Opel employs 25,000 staff in four German plants. It is part of a GM Europe operation that employs more than 50,000, with car manufacturing plants in Spain, Poland, Belgium and Britain, where Opel cars are sold under the Vauxhall brand, as well as engine and parts sites such as Aspern near Vienna.
    During the Opel negotiations, the fate of non-German Opel plants was not discussed. In the Opel plant of Antwerp, people got worried about their future. But the news that the 'Magna' multinational would take over Opel, was welcomed there.
    "I think that this is a very good thing for us, because we are now where we always wanted to be, so we can't complain about this. Whatever will happen to GM in America can't affect us anymore. In the first place, I am relieved that this deal took place," said Rudi Kennes from the Socialist Union.
    The Opel plant of Antwerp is one of the most efficient plants of GM Europe with the best production rate per worker. About 2,700 people are employed, coming from 13,000 people in the nineties.
    Magna announced it would soon start negotiations with governments of countries where Opel plants are based. The Belgian Unions are hopeful and optimistic that the Antwerp plant will continue to exist.
    "The concept of Magna, they look pretty professional. I think that when they see our concept, our business plan, they will go along with this, so we are quite comfortable of starting these negotiations," Kennes said.
    Magna plans to use Opel to push into Russia, Europe's fastest-growing car market before the economic crisis hit.
    Russian state-controlled Sberbank, which is helping to finance the deal and is set to get a 35 percent stake in Opel, welcomed the agreement as a way to restructure the Russian automotive industry.
    "To my mind, this is a very good chance for Russia to obtain one of the most advanced European automakers in terms of technology for an unprecedentedly low price," said Sberbank Chief Executive German Gref.
    The German government has been scrambling to safeguard Opel's future before GM files for bankruptcy.
    A first round of talks in Berlin collapsed amid mutual recriminations on Thursday morning.
    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.
    Magna and Opel had presented their plan to senior German officials and representatives of the U.S. 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 towards securing the future of Ruesselsheim-based Opel, which GM bought in 1929 and which has roots in Germany back to the 19th century.
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