Germany picks Magna bid for GM'S Opel

With American auto giant, General Motors, just days away from its expected bankruptcy filing on June 1st, its European subsidiary in Germany, Opel, has been negotiating to secure the company's future. After marathon talks, GM, the German government and Canadian auto parts maker Magna have agreed on a deal for Magna to take a majority stake in Opel. It's hoped that will prevent Opel, which employs 25-thousand workers, from insolvency.

Siegfried Wolf, Magna's co-chief executive officer, talks to  the media in front of the Chancellery in Berlin early Saturday,  May 30, 2009. German Finance Minister Peer Steinbrueck said  after a high-level meeting in Berlin that a plan was approved  for Canadian auto parts maker Magna International Inc. to move  ahead with a rescue of General Motor Corp's Opel unit. (AP Photo/Gero Breloer)

A consortium of Canadian and Russian investors, led by global auto-parts giant Magna International, is poised to take control of most of General Motor's Opel unit.

A last minute wrinkle came when GM asked for 415 million US dollars in emergency funding for Opel. That nearly scuttled talks on Thursday and prompted Fiat, another potential buyer, to walk away from the table.

But Magna, backed by Russia's top bank and second largest automaker GAZ, agreed to the short-term funding into Opel.

The German government has also agreed to provide up to 2.1 billion US dollars in bridge loans until the deal is finalized.

Frank-Walter Steinmeier, German Vice-Chancellor, said, "You know I've been saying since February that long-term security for Opel is impossible without interim funding from the state. That became clear two days ago during the night talks. I, and I hope all the others involved, are working towards reaching a solution tonight."

With national elections coming this September, the government is under pressure to save 25-thousand German jobs, nearly half of GM Europe's work force, from a looming GM bankruptcy court filing in the US and extensive restructuring. Prior to the talks, the governor of North Rhine-Westphalia state, one of four in Germany that has Opel plants, voiced his concern.

Juergen Ruettgers, Governor of North- Rhine Westphalia, said, "The way GM was running these talks is, I find, unacceptable, and if there is no resolution today I think the state's 15-thousand workers and their families who are affected have the right to demand accountability."