Opel, Vauxhall bankruptcy staved by Obama deal

May 30th, 2009 - 10:58 pm ICT by John Le Fevre  

Canadian car parts manufacturer Magna International will take over part of European car maker Opel, which includes the British Vauxhall brand, under a last minute deal brokered by US President Barack Obama.

German Chancellor Angela Merkel said the US President had helped clear some hurdles threatening the transaction in a telephone conversation.

Under the terms of the rescue package, Berlin will provide Opel with an immediate loan facility of €1.5 billion ($US2.1 billion) and about €4.5 billion ($US6.3 billion) in loan guarantees

The Canadian company has said it will put more than €500 million ($US700 million) into Opel, which employs more than 25,000 people in Germany and significant numbers of workers in Spain, Belgium, Poland and the UK.

Under the proposal, GM would keep 35 percent of the company and Opel’s workers would retain 10 percent. Magna would hold a 20 percent stake and Russia’s state-controlled Sberbank 35 percent.

The Canadian company, front-runner in the race to snap up Opel from the beginning, fought off rival bids from Italian carmaker Fiat and Brussels-based investment firm RHJ International.

In total, GM employs about 55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab, 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.

Magna said it planned to cut 2,500 jobs in Germany, about 10 percent of Opel’s workforce in that country, while Italy’s Fiat, had planned to cut 10,000 jobs.

Related Stories

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |