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31st May 2009

German government approves majority sale of Opel to Magna, Russians

posted in Car News Articles |

Filed under: GM, Opel

German government approves majority sale of Opel to Magna, Russians

by Sam Abuelsamid on May 31st 2009 at 11:44AM

With General Motors expected to file for chapter 11 bankruptcy protection in New York on Monday morning, negotiators in Germany scrambled to finalize a deal to save Opel from insolvency. Following a six-hour meeting in the German Chancellor’s office in Berlin on Friday evening, a deal was finally announced by finance minister Peer Steinbrueck. Although an overall deal to transfer control of Opel from General Motors was reached, details are still being worked out and a final contract won’t be signed for several more weeks.

Under the deal announced early Saturday morning, GM will retain a 35-percent stake in Opel, which would allow the automaker to continue sharing technology with the German brand. Russia’s government-controlled Sberbank is providing most of the financing for the deal and also gets a 35-percent share. Canadian auto parts maker and contract assembler Magna International will own 20 percent and the remaining 10 percent will go to Opel employees.

The German government will also provide a $2.1 billion bridge loan to Opel to help it keep operating during the transition phase. A key to the deal was German government demands that Opel assets be protected from GM creditors during a US bankruptcy proceeding. Opel will apparently be placed into some sort of trust in order to keep it whole and preserve its value for the new majority owners. President Barack Obama agreed to the deal with German Chancellor Angela Merkel during a late-night phone call.

It’s not known at this point how GM’s UK operations at Vauxhalll figure in to all of this and whether any of it will be preserved, consolidated into Opel, or sold off separately.

[Source: Reuters]

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