Magna nears deal for GM's Opel

Fri May 29, 2009 4:42pm EDT
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By Gernot Heller and David Bailey

BERLIN/DETROIT (Reuters) - Canadian auto parts group Magna has reached a preliminary deal with General Motors Corp to invest in Opel, boosting hopes for a deal to save the German unit as its U.S. parent prepares to enter bankruptcy.

Sources close to the negotiations told Reuters on Friday that Magna and GM were working out the final details of an agreement before a meeting with Chancellor Angela Merkel and senior ministers set for the evening.

"We have an agreement in principle between GM and Magna," one of the sources said.

As the clock ticked down to a Monday restructuring deadline for General Motors, widely expected to lead to a bankruptcy filing for the U.S. automaker, GM's Saab unit -- whose future also hangs in the balance -- was granted more time to restructure by a Swedish court.

Back in Detroit, ground zero in the global car industry's downturn, the United Auto Workers union overwhelmingly ratified a new cost-cutting labor agreement with GM, clearing a major hurdle in the automaker's restructuring efforts.

Under the deal, the union would receive a 17.5 percent stake in a restructured company in return for retiree healthcare concessions.

The agreement comes as GM races to slash debt and labor costs ahead of a government-imposed deadline of June 1. The No. 1 U.S. automaker is widely expected to follow smaller rival Chrysler into bankruptcy protection with the financial backing of the U.S. Treasury.

GM said late on Friday that President and Chief Executive Fritz Henderson will hold a media briefing on Monday.   Continued...

<p>New Opel cars are pictured at the Opel plant in Bochum May 29, 2009. REUTERS/Ina Fassbender</p>