Canadian auto parts maker Magna
has increased the amount of upfront capital it would inject into Opel in its offer for the General Motors European unit, a German government source said on Tuesday.
The revised bid leaves the total proposed investment at some 500 million euros ($713.9 million), but tilts the financing mix toward an immediate equity injection instead of using convertible debt for the bulk of the funding.
Magna and its consortium partner Sberbank are competing with two other bidders for Opel, which GM is being forced to sell after filing for bankruptcy protection in June. GM has sought billions of euros in state aid for Opel, giving the German government a say in who its partner will be.
Magna is now offering 350 million euros of its own capital immediately, said the government source, who is familiar with talks to find an investor for Opel. Furthermore, there should be a 150 million euro convertible bond.
Magna originally wanted to invest just 100 million euros ($142.8 million) of capital in Opel in two tranches of 50 million euros along with another 400 million in convertible debt, sources involved in the negotiations said,.
The Canadian group's improved offer comes after the German government criticized the amount of their own capital all three bidders for Opel planned to inject into the carmaker.
GM and the German government, which is being asked to provide Opel with loan guarantees, have been considering the offers from Magna and Sberbank, private equity firm RHJ International and China's Beijing Automotive (BAIC).
Germany has expressed a preference for Magna's bid, while sources involved in the negotiations say GM favors RHJ's offer.
GM, which may wish to buy back Opel in the future, is concerned about issues such as patent protection.
In Russia, Magna's consortium partner Sberbank said a decision on the Opel takeover could be made this week or next.
It (the decision) may be made this or next week. All possible negotiations were concluded and now it is up to the owner to decide, Sberbank Chief Executive German Gref, told reporters.
GM's European business said last Thursday it had agreed to continue detailed talks with Magna and RHJ. It did not mention BAIC in a statement on further talks.
The endgame of the battle for control of Opel will likely be played out in the Opel Trust, which has been responsible for Opel since GM entered bankruptcy in June, if the German government and 35 percent shareholder GM cannot agree on an investor.
The trust holds 65 percent of Opel shares.
Opel Trust's board is comprised of two GM representatives and two for Germany, one for Berlin and a delegate for the four federal states in which Opel has plants. A fifth neutral board member has no vote.
Magna wants to expand Opel's full-scale car assembly business and forecasts high growth rates, particularly in Russia, home of its bidding partner, Sberbank.
RHJ aims to shrink production to return Opel to profit and may be open to selling it back to GM at a later date.
(For questions and answers on the process for deciding Opel's fate, click on)
(Writing by Paul Carrel, editing by Will Waterman and Karen Foster)