UK Government Still Open To Magna Financial Support
09 Ottobre 2009 - 5:00PM
Dow Jones News
The U.K. government remains open to providing financial support
to Austrian-Canadian auto-parts maker Magna International Inc.
(MGA) but only in return for maintaining long-term production at
U.K. unit Vauxhall.
"The U.K. government has made it clear that it is willing to
commit funds but this will have to be on the basis that the Magna
proposal is a complete, long-term sustainable and commercial plan
that recognizes the logic of maintaining long-term production in
the U.K.," a spokeswoman at the Department for Business, Innovation
and Skills said Friday.
U.K. officials have expressed doubts about Magna's plans to take
over carmaker Adam Opel GmbH, which was formerly the European unit
of General Motors Co.
General Motors said last month it would sell Opel, as well as
sister brand Vauxhall, to Magna and Russian bank OAO Sberbank
(SBER.RS).
It is feared Vauxhall's Ellesmere Port unit could shoulder a
significant share of the job cuts.
The U.K. government has sent a representative to a meeting in
Berlin Friday with officials from Belgium and Germany.
Germany's federal and state governments have promised a total of
EUR4.5 billion in loans and guarantees, but want to gradually
reduce that contribution with support from other European countries
where the carmaker has operations. Opel has plants in Germany,
Spain, Belgium and Poland. Vauxhall has plants in the U.K.
Business Minister Pat McFadden has sat down with union leaders
and Magna's co-Chief Executive Siegfried Wolf in recent days and
Business Secretary Peter Mandelson will be speaking with senior
Magna officials later Friday.
The spokeswoman confirmed that the government has hired
consultancy firm PriceWaterhouseCooper to carry out due diligence
of Magna's plans to gauge what level of taxpayer support might be
appropriate.
But while the government hopes Vauxhall's situation can be
resolved as speedily as possible, the spokeswoman said no decisions
on support can be made until Magna clarifies its plans for the U.K.
unit and the European Commission completes its state aid review of
Magna's takeover of GM's European units.
European Commissioner for Competition Neelie Kroes wrote to the
U.K. government this week saying it is studying whether Germany's
EUR4.5 billion loan to Magna broke state aid laws.
The U.K., Spain and Belgium have all contacted the European
Union on state aid concerns.
-By Laurence Norman, Dow Jones Newswires; +44-207-842-9270;
laurence.norman@dowjones.com