2nd UPDATE: Germany Selects Magna As Partner For Opel
30 Mai 2009 - 4:18AM
Dow Jones News
The German government early Saturday said it selected
Austrian-Canadian car parts maker Magna International Inc. (MGA) as
a partner for General Motors Corp.'s (GM) German Adam Opel GmbH
unit, ahead of a likely bankruptcy filing of Opel's parent GM in
the U.S.
Speaking after hours of intense negotiations, German Finance
Minister Peer Steinbrueck told reporters the German government is
well aware of the risks posed by the deal, but nevertheless
defended the rescue of the troubled German carmaker as
justified.
Germany will provide EUR1.5 billion in bridge financing for
Opel, paving the way for a takeover by Magna and its two Russian
partners.
Magna has teamed up with Russian auto maker OAO GAZ Group
(GAZA.RS) and state-controlled OAO Sberbank (SBER.RS) in its bid
for Opel.
Steinbrueck said the EUR1.5 billion bridge financing, which it
intended to keep Opel afloat until the details of a takeover by
Magna are decided, is the upper limit the German government is
willing to provide.
Steinbrueck said the parties involved also agreed on the model
of a trusteeship for Opel for the interim period.
Speaking after the marathon talks that started Friday afternoon
in Berlin, Magna co-Chief Executive Siegfried Wolf said he expects
the deal with General Motors to be signed in five weeks.
Wolf confirmed that Magna will provide the short-term cash
demand of EUR300 million to Opel, which was one of the key reasons
for the German government to delay the decision on state aid
earlier this week. He said the funds would be available
Tuesday.
Because of the agreement on the trusteeship and the bridge
finance provided by Germany, Wolf said he sees no risk for Opel
coming from an eventual GM insolvency.
Wolf said plans for the future shareholder structure of Opel
haven't changed, but noted that "some adjustments" might have to be
made following the agreement after consulting with its Russian
partners.
"Our Russian partners have been very supportive in this deal,"
Wolf said, adding that Opel stands to "benefit from the significant
growth potential of the Russian auto market".
According to previous statements, Magna's consortium plans an
initial investment around EUR700 million. Under the plan, which is
backed by Opel's works council, GM would retain a 35% stake in the
company. Sberbank would take a 35% stake as well, with Magna
holding 20% and Opel's employees with 10%.
But some analysts have voiced concerns over the mid- and
long-term prospects of the planned tie-up as both Magna and GAZ
have been battered by collapsing demand in global auto markets amid
the economic downturn.
GAZ is controlled by Basic Element, the investment holding of
embattled Russian billionaire Oleg Deripaska. Debt-ridden
Deripaska, who also controls aluminum giant UC Rusal, recently lost
his 20% stake in Magna to creditors.
Magna itself swung to a loss of $200 million in the first
quarter from earnings of $207 million a year earlier as sales
tumbled 46% to $3.6 billion amid a large exposure to the ailing
Detroit auto makers. GM is Magna's largest customer and Chrysler
LLC is its fourth largest.
Italian auto maker Fiat SpA (FIATY), Magna's last remaining
contender for Opel, skipped the meeting in Berlin, citing a lack of
transparency over Opel's financial condition.
Although the decision on the fate of GM's European operations
eventually rests with the U.S. government and GM itself, Berlin
played a key role in the negotiations by providing billions of
euros for the bridging finance.
The German government took a deep interest in the sales process
as it faces general elections in the fall, and the prospect of
seeing thousands of Opel employees losing their jobs made a rescue
plan for the traditional car maker a top priority for both parties
in Germany's current grand coalition.
Ruesselsheim-based Opel employs around 25,000 workers. It is
part of GM's European operations that employ more than 50,000, with
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.
German Economy Minister Karl-Theodor zu Guttenberg said he
arrived at a different risk evaluation, but added he supports the
deal and will help to see it completed.
A press conference has been scheduled for Saturday at 8:00 a.m.
GMT to explain further details of the Opel deal, Finance Minister
Steinbrueck said.
The governor of the German state of Hesse, Roland Koch, said the
budget committees of Hesse and the state of North-Rhine Westphalia
still need to approve the deal. A decision could be made Sunday,
Koch added.
Opel has four plants in Germany, two of which are located in the
states of Hesse and North-Rhine Westphalia.
-By Christoph Rauwald and Klaus Brune, Dow Jones Newswires; +49
69 29 725 512; christoph.rauwald@dowjones.com