You are here

Germany offers Opel suitor loan

20/08/2009 12:53
Germany has said it would be prepared to give a 4.5bn euros ($6.4bn: £3.9bn) loan to carmaker Opel if its favoured suitor is chosen to take over the firm.

Berlin is offering the money if Opel's US owner, General Motors (GM), sells the German-based business to Canadian car assembly and parts group Magna.

Magna is one of the two remaining bidders for Opel, the other being Belgian financial group RHJ.

GM has yet to make a decision, but its board is meeting again on Friday.

Splitting payment

Germany's Deputy Economic Minister Jochen Homann said the country's federal government, and individual German states with Opel sites, would split the payment of the initial loan.

He added that they would be prepared to do this without waiting for other European countries with GM factories - such as the UK and Belgium - to contribute their own loans.

"We could envisage making a loan available, then later agreeing precisely how the costs are to be shared out with the other European countries," added Mr Homann, who leads German's Opel taskforce.

When asked whether Berlin would offer a similar loan to GM of RHJ is chosen, Mr Homann said: "The question doesn't arise, because the German government has a preference for Magna's improved offer."

Magna's offer for Opel is backed by Russia's Sberbank.

'No UK closures'

Opel employs a total of 54,000 workers across Europe, with 25,000 based in Germany.

Its Vauxhall UK business employs about 5,000 people across its two sites in Luton and Ellesmere Port.

Manga has said that "no immediate plant closures are contemplated" in the UK should its bid be successful.

RHJ is also expected to support saving both Vauxhall factories, but may ask workers to take pay cuts.

GM was forced to put Opel up for sale as part of its massive restructuring that saw it go into Chapter 11 bankruptcy in the US - before emerging as a leaner company with less debt.

Opel has been placed under the ownership of a trustee in which both GM and the German government have a stake - making the process of deciding a buyer complex.