Swedish car manufacturer Volvo needs help and is looking at the Belgian government for extra funding. Volvo operates a factory in the region of Flanders in Belgium and Kris Peeters, the Flemish Premier, is discussing with Stephen Odell, CEO of Volvo, a possible loan amounting to $418 million.
The talks are expected to be done by this week before the elections in the region. If the loan will push through, experts are assuming restrictions on where the cash can be used. The loan guarantee is aimed at helping specifically the plant in Flanders.
The primary concern of the Flemish government is to preserve the employment of the workers. The business plan presented by Volvo will be studied under this light plus the possibilities of Volvo being acquired by other parties. The Premier will only agree to the loan if he can get long term commitments from Volvo and understand its long term plans.
Volvo sees the negotiations with the Swedish government turning bleak after Ford reviewed the position of Volvo and sees its future as uncertain. Recently, the car maker was able to avail of a $275 million loan from the European Investment Bank but it still needs more help to stay afloat.
There are reports that there are five companies which expressed their interest to buy Volvo and a decision as to whom the company will go can be reached as early as July. Some speculate that Chinese car makers can benefit with the research and development, and safety technology that Volvo has in place.
Ford acquired Volvo in 1999 for $6.45 billion but the value of the company now is registered at $2.4 billion.