Opel Gets First German Loan Installment

BERLIN (AP) -- Auto maker Opel on Tuesday received the first installment of a bridge loan that was a key part of a deal to shield it from parent General Motors Corp.'s bankruptcy protection filing.

The German government said the first euro300 million ($425 million) of the financing was paid out following Saturday's agreement for Canada's Magna International Inc. to move forward with a rescue plan.

The federal government is sharing the burden of the loan, worth a total euro1.5 billion, with the four German states in which Ruesselsheim-based Adam Opel GmbH has plants.

"This responsiveness of the German government ensures that (Opel's) operations maintain adequate liquidity as a more independent European Opel/Vauxhall company continues normal operations," Opel and GM Europe said in a joint statement.

The financing "provides sufficient time to finalize the partnership agreement with Magna," they added.

Saturday's deal calls for Magna to take a 20 percent stake in Opel and for state-controlled Russian lender Sberbank to take a 35 percent stake, giving their consortium a majority.

GM will retain a 35 percent holding, while the remaining 10 percent will go to Opel employees.

GM Europe was not included in its Detroit-based parent's filing on Monday for Chapter 11 bankruptcy protection.

Other GM Europe assets, including British sister brand Vauxhall and its plants, were consolidated under Opel before Saturday's deal and were put in the care of a trustee. Sweden's Saab is not included in the deal.

Opel employs 25,000 people in Germany, nearly half of GM Europe's work force.

With elections looming in September, German politicians were keen to salvage as many jobs as possible.

Still, there was some disquiet over the outcome, with Economy Minister Karl-Theodor zu Guttenberg saying at the weekend that he would have preferred to restructure Opel through a bankruptcy process.

Chancellor Angela Merkel rejected that view again Tuesday, saying that the costs raised by that "also would not have been so pretty."

"We are giving Opel a chance," she said in Berlin. "This would not have been possible without the state's financial commitment."

"On the whole, I think the result is justifiable, although not without risks," Merkel said. She insisted that Opel was "a special case."

Magna stressed in a statement that there is still "no assurance" the Opel deal will be completed. However, chairman Frank Stronach said he looks forward to working with GM, Germany and others "to turn our concept into a reality."

"I believe we have achieved a constructive solution that represents a 'win-win' for all stakeholders and will position Opel to compete and succeed," Stronach said in the statement, released late Monday.

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