Canadian firm to rescue Opel

A top-level meeting in Germany approved a plan today for Canadian car parts firm Magna to rescue Vauxhall parent General Motors’ European arm.

A top-level meeting in Germany approved a plan today for Canadian car parts firm Magna to rescue Vauxhall parent General Motors’ European arm.

German finance minister Peer Steinbrueck said Magna International could now move ahead with a rescue of General Motors’ Opel unit.

The agreement will see Opel put under the care of a trustee later today.

The German government will provide a €1.5bn bridging loan which will be available immediately.

The plan is aimed at shielding Opel from GM’s likely application for bankruptcy protection.

Mr Steinbrueck said: "A solution has been found to keep Opel running.''

Siegfried Wolf, a co-chief executive of Magna, said he expected the agreements with GM would be signed in five weeks, but insisted that the deal struck today would prevent Opel from being touched by whatever would happen to GM.

Yesterday economy minister Karl-Theodor zu Guttenberg said GM and Magna were negotiating on “new ideas” from the bidder, which also were being examined by the German government.

Mr Wolf said his company had taken a risk in seeking to acquire the German carmaker, but was eager to show it was committed to its future success.

The German government held the second round of top-level negotiations after talks stalled on Thursday over new short-term funding needed to move Opel into an independent legal structure.

Fiat, the other suitor for Opel, stayed away from the talks which began last night, saying it faced “unreasonable” funding demands.

Germany had sought an agreement that would shield Opel – which employs 25,000 people in Germany, nearly half of GM Europe’s workforce – from a looming GM bankruptcy court filing in the US and extensive restructuring.

The government stressed the need to make Opel legally independent under a trustee so that any German taxpayer assistance would not go to the US.

Ontario-based Magna emerged early on as a leading bidder for a majority of Opel from a consortium that also includes Russian lender Sberbank.

German officials blamed short-term financing needs they said were brought up by GM totalling €300m for preventing a decision earlier this week. The government insisted it would not increase its pledge of €1.5bn in bridge financing.

Opel and sister brand Vauxhall have operations in Belgium, Spain, the UK and Poland among other countries.

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