Opel deal in the works after Spanish workers give okay

Workers at the German car company Opel - the European offshoot of US carmaker General Motors (GM) – should know this week whether the future of their group has been secured, although Spanish trade unions and the Canadian-Russian Magna consortium have reached a basic agreement guaranteeing the future of a Spanish Opel for the next 10 years. The signing of a deal to sell a majority stake in GM’s struggling Opel unit to Magna was delayed negotiations over the sale with labor unions and the European Commission, Deutsche-Presse-Agentur (dpa) reported.
The new bout of uncertainty about Opel’s future comes more than a month after GM announced plans to hive off the stake to a consortium led by the Canadian auto parts group Magna International and which includes the Russian bank Sberbank. As a result, GM decided against an offer for Opel made by Belgium-based private equity investor RHJ International. The decision on GM’s European Opel subsidiary, which includes operations in Germany, Belgium, Poland, Britain and Spain, formed part of a major global restructuring of the Detroit-based auto group. About half of Opel’s 50,000-strong workforce is in Germany. GM and the Magna-led consortium had been expected to sign off on the agreement, which has the backing of the German Government.
Berlin has also said it would provide 4.5 billion euros ($6.7 billion) in state-backed guarantees to help Magna restructure Opel.
But the European Commission raised objections to the sale arguing that the planned German aid could be in breach EU competition rules. In particular, the commission expressed concern that the financial support promised by Berlin was conditional on the Magna-led consortium acquiring the majority holding in Opel. But a company official insisted that was not the case, telling dpa there was “no alternative left to us other “than Magna.
“There are significant indications that aid promised by the German Government to New Opel was subject to the pre-condition that a specific bidder, Magna and (Russian bank) Sberbank, was selected to acquire a majority of the shares in New Opel,” the European Commission said in a statement. “Such a precondition for the aid would be incompatible with (EU) state aid and internal market rules,” the statement said.
The sale to the Magna-led consortium has also faced stiff criticism from unions and governments in other countries where Opel has operations. They argued that their workforces could be disadvantaged by Berlin’s financial support for Opel. Spanish Industry Minister Miguel Sebastian said that Spain’s trade unions and the Magna-led consortium had reached a basic agreement guaranteeing the future of a Spanish Opel factory for the next 10 years. That came after Opel’s Spanish employees announced plans to stage four one-day work stoppages to protest the moves by the Magna consortium to cut jobs at Opel in Spain.
The agreement contained a “competitive” industrial plan for the plant of the General Motors subsidiary in Figueruelas, northern Spain, according to the minister, who mediated in the talks. The plan foresees cutting around 900 jobs out of the total 7,500 at the factory. Magna’s previous plan had included slashing 1,300 jobs. Magna was now willing to guarantee that no changes will be made at the factory until the summer of 2011, according to media reports. The agreement will only enter into force after being approved by a committee representing the Figueruelas employees.
The German government has sent assurances to GMs, the Opel Trust and the European Union’s executive that the company’s owners will receive the same level of state aid no matter to whom they sell Opel, EU officials said. The news came after the European Commission unveiled suspicions that the German aid was conditional on Opel being sold to the Magna-Sberbank consortium. “What we have had is indications that the German authorities have, as we had requested, written to the Opel Trust and General Motors explaining that the aid would be available irrespective of the choice of investor or the plan,” commission spokesman Jonathan Todd told journalists in Brussels.
A German economics ministry spokesman confirmed that they had written to inform the Opel Trust and General Motors of the EU’s concerns. A copy of the letter was sent to the commission, which oversees EU competition rules. “The ball is now in the court of the companies,” and of the German state, which still has to provide details of exactly how its offer to underwrite the Magna deal with 4.5 billion euros in loans and credit guarantees would work, Todd said. Opel’s original owners, including US car maker General Motors, “should be given the opportunity to reconsider the outcome of the bidding process on the basis of firm written assurances by the German authorities that the aid would be available, irrespective of the choice of investor or plan,” it said.
The German government said there was no cause for concern, since the Opel deal was based on purely economic considerations.
“There is no reason to doubt the decisions made to date,” government spokesman Ulrich Wilhelm said. EU Competition Commissioner Neelie Kroes revealed that she had written to Germany’s Economics Minister Karl Theodor zu Guttenberg questioning the legality of the takeover sweetener. “There are significant indications that aid promised by the German Government to New Opel was subject to the precondition that a specific bidder, Magna/Sberbank, was selected to acquire a majority of the shares in New Opel,” a Commission statement said.