The marathon meeting at the Adlon may not have been for naught after all. “After hours of talks with Canadian auto parts supplier Magna International, GM has reached an agreement, in principle, ” Reuters reports. Now they have to agree on a memorandum of understanding that will serve as the basis for bridge financing of €1.5 billion ($2.1 billion) and the trustee plan that comes with it. The German government will not give the bridge financing without the trustee scheme. Otherwise, their money and Opel will be drawn into the black hole of the Chapter 11 filing that is expected for Monday.
A framework agreement has been reached, says Reuters, but the MOU has not been signed as the story hits the wire. The people with the $2.1 billion (graciously provided by the German taxpayers) will meet at 6 p.m. This being Germany, they want something in writing. Preferably with the seals of GM and Magna at the bottom. And finally, before 6p.m.: Habeas Letter Of Understanding! Signed by GM, Magna, and Russia’s Sperbank.
BBC confirms that “Canadian-Austrian car parts maker Magna International has reached an agreement in principle to rescue GM Europe, owner of Opel and Vauxhall. The agreement was reached with General Motors, but will need to be approved by the German government, which will provide funding to the new owner.”
The Belgium government, home of an Opel plant in Antwerp, already complained. Their Minister for the Enterprise and Simplification, Vincent Van Quickenborne said Germany didn’t stick to the agreed-upon rules, and he is “very worried about the whole situation.”
“Not so fast,” said Herr von und zu Guttenberg. According to Der Spiegel, any deal must first pass the scrutiny of the German government. “We cannot say that there will be a decision today,” said the blueblooded economy minister. Well, then maybe tomorrow, early in the morning. After the EU has been properly informed and cooperated with.
Vice chancellor Steinmeier wants to get it done tonight: “Today is the day when we should try everything to build the basis for the future of Opel.” He already called Magna’s Stronach, who’s back in Graz, Austria, and congratulated him.
Remember: While Magna is getting the limelight and will have a strong hand in running the show, they are far from owning the place. According to the previous plans (which may or may not have survived the marathon negotiations—we shall see) Russia’s Sberbank will own 35 percent of Opel, Magna 20 percent, and Opel employees will get 10 percent. GM won’t go away, they’ll retain 35 percent of the business.
Does anyone know when Magna will present their restructuring plans to the public?
There’s a lot of Vauxhall/Opel workers with nervous looks on their faces right now….apart from the German workers, of course….
No idea – situation fluid.
Vincent Van Quickenborne is not Belgium economy minister (as there’s no such thing per se in the kingdom), his proper title is Minister for the Entreprise and Simplfication.
And he has to be worried: election day is in 10 days…
Hotel Adlon. Best breakfast buffet in Berlin!
7: Fixed. Bedankt.
Opel and the German government could do worse, Magna and there Owner are a good company, also Frank S. from Magna is of German descent, having been born in Austria and when he came to this Country of Canada he had not very much money, but he worked hard a built up a great Business here, good luck to Magna!
One minor item, whispered to me by a VW contact:
“Magna is heavy with former Audi execs. Most of the guys Piech kicked out are now at Magna.” I bet they are itching to get back in the game – and some revenge.
As an Austrian, Frank S. would object to the “German descent” but he’s eager to duke it out with the other Austrians running VW
Well, the world really is upside down. Imagine a Canadian owned car company in Europe……
Well, the world really is upside down. Imagine a Canadian owned car company in Europe……
Yes indeed! Now Opel/Vaux/Magna can buy out GM Canada, rename it Opel NA and start building Opels in Oshawa’s new flex plant.
Yikes; the last Canadian car company lasted about 18 months.
Studebaker-Canada Limited.
OK I guess it’s an exaggeration; the President of Studebaker-Canada Limited, Gordon Grundy, was actually under the thumb of Studebaker Corporation in the states.
Manufacturing cars in one country and having the HQ doesn’t make a car company “from” the country where the cars are manufactured. Does it?
My pal and colleague insists that no matter if a ?Toyota or Hyundai or BMW is manufactured in the US, it is a foreign car.
But he will cheerfully classify his Mexican produced vehicle with a US badge, as American.
Something occurred to me the other day: GM must want to get rid of Opel, and the current situation just provides a plausible cover. After all, they’re not shedding operations anywhere else in the world, just Europe.
Perhaps, now that they have GMDAT to develop small and midsize cars, they no longer see Opel–with its high costs–as essential, or even desirable?
http://www.truedelta.com/blog/?p=367
“After the EU has been properly informed and co-operated with.”
I’ve been saying for months that the EU is essentially powerless to stop or even slow down automotive nationalism/protectionism in Europe regardless of what various treaties might say. So far events are proving me right. Politics is about power, and the EU hasn’t the power to stop Germany, France or the UK from doing whatever they feel like doing. The EU is really only able to push around the smaller members of the Union.
“GM must want to get rid of Opel…”
GM Europe is hemorrhaging money just like almost every other car maker in the world. Toyota and even Ford have money with which to get by for now, GM only has Uncle Sam’s money to play with. The US government certainly isn’t going to pour billions into keeping GM Europe afloat, so if it is to survive, that task falls to European governments. Germany isn’t of a mind to prop up a US company, so GM Europe has to be cut loose from GM-US in order to get access to European government money.
If GM retains any ownership share, the deal is not worth it. Mark my words.
Good Article
http://news.bbc.co.uk/2/hi/business/8074218.stm
I don’t exactly understand how this works.
Magna is listed as the buyer but they get 20%.
The German Government gets 10%.
The Russians are buying 35% and GM keeps 35%.
The way I see it, that makes it a joint partnership between GM and a Russian Bank with some other major shareholders.
Why does Magna get so much credit?
@IGB
Magna are the friendly face of Austrian business working as a front for the Russians to take control of a big slice of German Industry. Of course, most Germans are seduced about the possibility of their little Austrian cousins providing some money to keep brave and proud German workers in their jobs.
I am still utterly amazed that no one in Germany is making a fuss about Kremlin supported businessman getting their hands on Opel technology and control over their plants.
For sure GM doesn’t give a stuff about the Germans. They just want to be sure that they can exploit as much know how from Opel (already done!) and get access to revenue from the Russian emerging market. GM are already trying to compete with Opel by selling the Chevvy Cruze (built on the same platform as the next generation C-segment Astra) at €1,500 less than the current base model Astra.
The “Magna” business case makes no sense at all. No job cuts, no cost savings. On the revenue generation side, all they can say is that they will go for 20% market share in Russia. Will that be with superior product (and if so, why only increase sales in Russia – superior product sales further afield?!). Or will that share come because the Russian government (now by proxy a player in the auto business) start to change the legislative rules to be in favour of Opel? Either way, a doubling of market share for Opel in Russia will only mean increased volumes of around 150K units per year. That’s just not enough revenue to turn around the problems that Opel has been going through.
Meanwhile, my intelligent and informed German friends seem to know nothing about Sberbank or the Russian link. They still think those nice friendly Austrians are going to be in charge and that they will be able to take control back from them in no time at all. It’s a shocker!