Magna 'close to deal' over Opel

Canadian firm nears deal to rescue GM Europe, with 50,000 jobs at stake.

    Some 50,00 jobs are at stake across Europe in negotiations GM's German operations  [GALLO/GETTY]

    Job cuts

    Fiat, Magna's main rival in the race to rescue Opel, pulled out of Friday's talks over a disagreement with the German government and said it could not improve its offer.

    GM's debt

    GM's total liabilities of $185bn break down into:

    $27bn in unsecured debt
    $25.5bn in government and bank loans
    $20bn owed on healthcare and pensions
    $112.5bn in other debt

    John Terrett, Al Jazeera's correspondent in New York, said: " Actuaries in Germany are going through [the deal] line by line by line and we can expect an announcement quite soon saying that Magna has got the GM operations that it wants and that it will be backed by the German government.

    "But there is very real suspicion about what the Germans are really up to - workers at Vauxhall in the UK at Ellesmere Port and Luton are concerned that they will lose out if the deal goes ahead.

    "But Peter Mandelson, Britain's business secretary, has said that he has secured an agreement from whoever wins the bid that there will be at least 5,000 Vauxhall jobs preserved.

    "There has been some controversy that Magna are backed by Russia money, by a Russian bank, but that has gone away as Magna is offering to cut the fewest number of jobs ... 9,000 across the whole of Europe, only 2,500 at Opel. Fiat would have cut 10,000 jobs."

    Better proposal

    Details of Friday's deal have not been released but under plans revealed by Siegfried Wolf, Magna's co-chief executive, last week GM would still hold 35 per cent of its European operations with Russian state-controlled bank Sberbank owning another 35 per cent.

    Magna would own 20 per cent and the remaining 10 per cent would be in the hands of Opel's 50,000 European employees.

    Wolf said that Magna's proposal called for "considerably fewer" job cuts than the 10,000 that labour groups fear would be lost under Fiat plans.

    He said cuts would be "calculated to the size of the market" and there have been indications that the company would cut about 10 per cent of the workforce, about 2,500 jobs, in Germany.

    Wolf said Magna planned to inject between $700m and $1bn into Opel and that the future of all four German Opel sites would be guaranteed.

    However, Wolf promised only to look for ways to keep open GM's Antwerp plant in Belgium and the Vauxhall sites in England - Luton and Ellesmere Port.

    Unions and centre-left Social Democrat members of the governing coalition in Germany have shown support for the Magna bid over Fiat's offer.

    Looming bankruptcy

    Germany has been aiming to make an agreement with GM and the US government over Opel, in order to shield it from the American carmakers' looming bankruptcy - which it is expected to file for within days.

    Talks collapsed on Thursday when Washington balked at Germany's plan to temporarily place Opel assets in a trust to shield them from GM creditors.

    Berlin responded by refusing to release $2.1bn in bridge-financing for Opel.

    The European Commission also met on Friday to co-ordinate government efforts to save GM's European operations.

    Representatives from 18 European Union nations agreed to avoid unilateral action and respect EU state aid laws in their handling of the GM crisis.

    SOURCE: Agencies


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