Germany chooses Magna International
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBH_n_xBGGzo&refer=home
German Chancellor Angela Merkel’s government chose Magna International Inc. as the buyer for General Motors Corp.’s Opel and confirmed a financing plan aimed at helping the money-losing unit avert insolvency.
Magna, the Canadian car-parts maker that’s competing with Fiat SpA in its bid for Opel, will invest in the Russelsheim, Germany-based carmaker, Finance Minister Peer Steinbrueck said at 2:13 a.m. in Berlin after a meeting with leaders including Merkel. Germany will provide a 1.5 billion-euro ($2.1 billion) loan to keep Opel afloat. Officials said as many as 11,000 jobs may be lost across Europe, including 2,600 in Germany.
“You can be sure that we didn’t take the decision lightly. All the federal and state representatives are aware that there are some risks,” Steinbrueck told reporters. “We have a high interest in maintaining employment at all four Opel sites.”
GM is selling a majority stake in Opel, including the Vauxhall brand in the U.K., as part of a global reorganization before a U.S. government-imposed June 1 deadline to restructure. Germany, which led the search for an investor, has a say because of the Detroit carmaker’s request for loan guarantees. Opel will be placed under a trust later today, shielding it from a probable GM bankruptcy next week.
Merkel, facing national elections on Sept. 27, is under pressure from lawmakers and labor unions to save the 25,000 German Opel jobs out of GM Europe’s 55,000 positions.
“If an agreement isn’t reached, Opel has no choice but to file for insolvency,” Juergen Reinholz, economy minister of Thuringia, said in an interview before the meeting. His is one of the four states where Opel has assembly plants. Reinholz took part in negotiations that stalled earlier this week after Germany balked at GM’s demand for immediate cash assistance.
Of the 1.5 billion euros in short-term loans, GM wants an upfront payment of 450 million euros from Germany to keep Opel operating, GM CEO Fritz Henderson said in a May 28 interview. That’s 350 million euros more than the German government had anticipated, he said.
Today’s decision wasn’t unanimous. Economy Minister Karl- Theodor zu Guttenberg, who led the talks and had considered an “orderly” insolvency for Opel, said he would have chosen a different solution because of the financial risks to taxpayers associated with Magna.
Merkel said that Opel had to be rescued and blamed “great mismanagement” at GM for the unit’s troubles. She said she spoke with President Barack Obama yesterday and that German-U.S. relations had been put under strain by the Opel situation.
“In this crisis, the state has to help more strongly than it normally does,” the chancellor said in a statement today. “But we’re only doing this on the premise that the state knows it’s not the better entrepreneur.”
Remaining issues concerning the agreement with Magna should be resolved by tomorrow, she said.
Aurora, Ontario-based Magna will advance 300 million euros in cash to Opel on June 2, Co-Chief Executive Office Siegfried Wolf said an interview after the announcement. He said that he expects a final contract with GM within four to five weeks.
“Opel is rescued for now,” GM Europe President Carl-Peter Forster said.
German state leaders and labor representatives have said repeatedly since bids were submitted on May 20 that they favor Magna’s offer, which includes as much as 700 million euros in investments in partnership with Russia’s OAO Sberbank. The plan also foresees a linkup with OAO GAZ, which said today it could produce 180,000 Opel cars a year at its main Russian site.
Fiat made a non-cash bid that would contribute factories and assets from its own carmaking operations.
IG Metall, Germany’s largest union, plans to begin talks with Magna “as soon as possible” to limit job cuts and keep plants open, Oliver Burkhard, an official of the group, said in a statement.
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so magna beats fiat..as predicted by one of our posters a few days ago..a bit of russian flavour in that bid from the canadian giant..lets see what fiat will do now..go harder for saab now perhaps?..might pay to do some research on magna now
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