General Motors and Canadian auto parts group Magna International have reached an agreement in principle that could rescue ailing German carmaker Opel, sources close to the negotiations said today.
The two sides have been trying to agree on a memorandum of understanding that would serve as the basis for bridge financing of €1.5 billion as well as a trustee solution that would protect Opel from creditors in case parent GM files for Chapter 11 in US bankruptcy court.
“A framework agreement has been reached. The goal is to work out as many of the details as possible before the meeting with (Chancellor Angela) Merkel in order to sign a memorandum of understanding today,” one source with knowledge of the talks told Reuters.
The US and German governments and the two last remaining suitors for Opel, Italy's Fiat and Canada's Magna, are trying to clinch a deal today that eluded them at the marathon session in Angela Merkel's Chancellery building overnight.
Earlier reports had suggested that the United States government had balked at Germany's plan to place Opel assets in a trust while a deal with a suitor was finalised and GM shocked negotiators with a surprise request for $500 million to fill a gaping funding hole.
That infuriated Berlin, which refused to release €1.5 billion in temporary financing it has pledged to Opel, a company based in Ruesselsheim near Frankfurt that employs 25,000 staff in Germany and has been under GM's wing for 80 years.
Reuters