May 29, 2009

Magna, GM reach tentative deal for Opel

Canadian auto supplier Magna International and General Motors Corp. have struck a tentative deal to rescue Opel in Europe, a source close to the talks said.

Marathon negotiations that began Wednesday concluded with a $2.1 billion bridge loan that would keep Opel going in the event GM filed for bankruptcy, The New York Times reported Friday.

The Detroit Free Press said GM board members were discussing a bankruptcy filing for Monday, the deadline for GM to come up with a new financial plan or risk losing its federal line of credit.

Italian automaker Fiat withdrew from Friday's talks. In a statement, Fiat Chief Executive Officer Sergio Marchionne said the deal would expose Fiat to unnecessary and unwarranted risks.

Magna's offer for Opel originally included Russian bank Sberbank, which would own 35 percent of Opel. Magna would own 20 percent, while GM would retain 35 percent, the Times said.

Opel employees would control 10 percent.

The discussions were jolted Thursday when GM Thursday said cash reserves available to Opel fell $145 million short. Fiat balked at putting up cash for the company, but Magna said it would add $422 million to its bid after GM announced the shortfall.