Germany seals deal to save Opel

Mon Jun 1, 2009 9:21am EDT
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By Gernot Heller and Madeline Chambers

BERLIN (Reuters) - Germany heaved a sigh of relief on Saturday over a deal with Canadian auto parts group Magna, General Motors and the U.S. government to save carmaker Opel from the imminent bankruptcy of its U.S. parent.

The accord sealed after six hours of talks in Chancellor Angela Merkel's offices still needs final approval but seemed set to ringfence Opel and its 50,000 workers in Europe from a GM Chapter 11 bankruptcy filing widely expected for Monday.

Merkel said U.S. President Barack Obama -- due to visit Germany next week -- helped swing the deal with a telephone call on Friday.

That helped clear hurdles over financing that had threatened to scupper the entire transaction and allowed GM to agree the deal with Magna about the future of its European operations, of which Opel is the centerpiece.

"I spoke on the phone with the American president yesterday and we were in agreement that we had to do everything possible to come up with a good result for this complicated task," Merkel told reporters. "That conversation clearly influenced the negotiations last night."

Labour leader Klaus Franz said some Opel workers arriving for early Saturday shifts hugged each other in spontaneous celebrations even though some worried the proud company, which traces its roots to the 19th century, was not out of the woods.

"This was pure emotion," Franz told Reuters Television. "I have to see now how to get the adrenaline levels down."

Opel workers favored Magna over rival suitor Fiat even though Magna will cut some 11,000 jobs in Europe, a quarter in Germany. Plants in Belgium and Britain may not survive.   Continued...

<p>An Opel logo is pictured at a car at Opel dealer in Bochum May 29, 2009. REUTERS/Ina Fassbender</p>