An outline agreement between GM and Magna International has almost been reached for the acquisition of Vauxhall and Opel. Currently, GM and the government of Germany are coming up with a memorandum of understanding with Magna International that would be the foundation for the 1.5 billion Euro (1.3 billion Pound) bridge financing, together with a solution that will protect Opel from creditors in the event GM files for Chapter 11 bankruptcy in the US.
They have already reached a framework agreement with the aim of working out as many of the details as possible before a conference with Chancellor Merkel to sign the memorandum of understanding today.
The attention of the German government is now focused on reaching an agreement with Magna, which has been requested to forward its new proposals for Opel prior to tonight's meeting. If GM and Magna cannot reach an agreement, there's no other alternative for Opel but the filing for bankruptcy.
Right now a meeting is transpiring between the German government, as represented by Chancellor Merkel, the ministers involved, and officials of German states where GM facilities are located, to talk about approving the agreement.
The Canadian company has promised to put in between 500m (GBP437 million) and 700m (GBP612 million) Euros into Opel, if the agreement is approved by the German government. Along with this, Magna will also be cutting 10 percent of Opel's workforce in Germany, about 2,500 jobs. This is in contrast to Fiat's plan to cut 10,000 jobs. However, Magna's plans for Vauxhall's facilities in Luton and Ellesmere Port in the UK have not been disclosed.
The European Commission (EC) discussed with members their concern that job cuts from the deal will be focused outside Germany. The EC made a statement saying that any state support should not consist of non-commercial conditions in relation to the location of investments and/or the distribution of restructuring measures geographically.
The German government says that the aid in loans to Opel will be an advantage to the plants in all countries. GM will be keeping a 35% stake in the company under the agreement with Magna and 10% will be owned by the employees of Opel. It is noted that the bid of Magna is supported by Sberbank a state-run bank of Russia and Gaz, the truck firm of Oleg Deripaska. [source autocar]