August 13, 2009 / 11:03 AM / 10 years ago

Magna says resolves final Opel issues with GM

FRANKFURT (Reuters) - Magna and its Russian partner Sberbank have reached an agreement in principle with General Motors’ management over a contract to buy a stake in GM’s European unit Opel, Magna Co-Chief Executive Siegfried Wolf told Reuters on Thursday

The Reichstag building, seat of the German lower house of Parliament Bundestag, is reflected in an Opel car emblem in Berlin, August 4, 2009. REUTERS/Tobias Schwarz

The boards of directors of GM and Canadian automotive group Magna still need to approve a deal before trustees who control a 65 percent stake in Opel can give their final consent.

The agreement between Magna’s consortium and GM — which follows weeks of hard bargaining — does not necessarily mean that competing Opel bidder RHJ International is out of the race, however.

GM’s chief negotiator on the deal, John Smith, has said that the Belgian private equity firm had already reached an agreement with GM management on Opel. Now it is up to GM’s board and Opel trustees to pick one of the two rival offers.

But the overwhelming support for Magna in Germany from key players like Chancellor Angela Merkel suggests that the Opel Trust will likely sign off on a deal with the Canadian auto parts supplier and Russian lender Sberbank.

GM Europe said the company would review revised draft agreements on an Opel deal presented on Thursday by Magna and Sberbank, stopping short of saying the remaining issues between GM, Magna and Sberbank had been resolved over a sale.

GM also said it has asked the Opel task force created by the German government to outline a financing package that Germany and other European states hosting Opel plants would support.

Worried about 25,000 Opel jobs in Germany as September elections approach, Berlin put up 1.5 billion euros ($2.1 billion) in bridge finance for a ring-fenced Opel in May, just before the U.S. parent slid briefly into bankruptcy.

“This is the best solution for Opel and Opel workers,” top politicians in the German state of Rhineland-Palatinate, which hosts one of four Opel plants in Germany, said in a statement.

Magna is in the middle of negotiations over the financing for a deal, which includes an equity component of 500 million euros along with 4.5 billion euros in loans guaranteed by European governments.

Editing by Michael Shields

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