Volvo may receive lifeline from Belgian government

If approved, the Belgian loans will only be applicable for Volvo’s local operations

If approved, the Belgian loans will only be applicable for Volvo’s local operations

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Despite Volvo being a Swedish company, the trouble-stricken carmaker may have to look to the Belgian government for financial aid to help keep it on its feet. Volvo currently operates a plant in the Flanders region of Belgium, and the Flemish Premier Kris Peeters has been in talks with Volvo CEO Stephen Odell in regards to securing loan guarantees for the carmaker to the tune of €300 million ($418 million).

Belgian media outlets are reporting that Volvo and the Flemish Premier are hoping to work out a deal by June 7, just days before the region’s elections. Should the loan guarantees go ahead, there will be restrictions on where the cash can be used, with the Flemish government stating to Automotive News that the guarantees would not apply for any "factories anywhere other than in Flanders."

Securing a future for its auto workers appears to be the Flemish government's top priority at this point, and in this vein it will be examining a business plan from Volvo, as well as wanting to figure out a deal that takes into account a possible sale of Volvo. Peeters stated that he would require "firm commitments" and assurances about "Volvo's long-term future" before he could agree to any loans.

Talks with the Swedish government are failing to progress following a strategic review from Ford that left Volvo in an uncertain position. The European Investment Bank has already given the ailing company a loan of €200 million ($279 million), but it requires significantly more funding to help it stay in shape.

As for the likely sale of Volvo, there are reportedly five bidders interested in the company and a decision on a final buyer may be announced as early as next month.

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