Volvo To Get $281M Government Loan

BRUSSELS (AP) -- Belgium's Flemish regional government on Friday said it was ready to give Ford Motor Co. subsidiary Volvo Car Corp. a euro198 million (US $281 million) guarantee to help it upgrade a local plant.

Flemish Premier Kris Peeters also said he was asking the German government to clarify the future of General Motor Corp.'s Opel plant at Antwerp. Germany reportedly favors a bid by a Canadian-Russian consortium that wants to close the factory which has around 2,400 workers.

Belgian officials have sought for years to keep jobs at local car making plants as manufacturing shifts to lower-cost locations in southern and eastern Europe and the industry cuts back amid a dramatic slump in car sales.

For Volvo, the Belgian guarantee would help it secure a loan from the European Investment Bank to build the S60 sedan and the V30 hatchback at the Sweden-based company's largest production plant in Ghent where it employs 3,800.

The EIB is backed by EU governments and sells bonds to raise money for major infrastructure projects.

Officials will hold talks with the company over the coming months to thrash out terms for the guarantee. Volvo is also discussing a euro200 million guarantee from the Swedish government that will cover projects in Sweden.

Ford Motor Co. has said it is conducting a strategic review which could lead to a sale of Volvo, which is separate from truck and bus maker AB Volvo.

The sale of General Motor Corp.'s European operations, Adam Opel GmbH, narrowed down to two bidders this week as the company said it would focus on offers from the consortium of Canadian auto parts maker Magna International Inc. and Russian lender Sberbank and from RHJ International SA, a Belgium-based investor.

The Magna bid is favored by the German federal government, the four state governments where Opel makes cars and the country's largest trade union. Austrian magazine Format claims that Magna plans to close the Antwerp plant and scrap 10,560 jobs to save euro264 million.