Canadian auto parts maker Magna offered to increase the amount of upfront capital it would invest in Opel as part of a bid for the General Motors' European unit, several sources said on Tuesday.

The revised bid leaves the total proposed amount at some 500 million euros ($714 million), but tilts the financing mix towards an immediate equity injection instead of using convertible debt for the bulk of the funding.

It is expected to silence some of the critics in the German government that have admonished Magna for effectively shifting all of the risk onto German taxpayers that will largely finance the deal through billions in loan guarantees.

Germany's economics minister, Karl-Theodor zu Guttenberg, has said that European cartel authorities would look at Opel's ratio of equity to debt as a key criteria for whether a new owner just served as a fig leaf for a state-sponsored bailout.

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.

The Canadian company and its consortium partner Sberbank are competing with RHJ International (RHJI.BR) for Opel. GM can no longer afford to finance its European carmaker and is being forced to give up majority control in exchange for substantial government aid for Opel.

Magna originally wanted to invest just 100 million euros ($142.8 million) of equity capital in Opel in two tranches of 50 million euros along with another 400 million in convertible debt, banking on overwhelming political support from the four regional states home to Opel for its bid.

The world is a difference place with 350 million. This proves it was a correct decision to negotiate with two parties -- otherwise Magna never would have improved its offer, one source close to the talks said, adding that the only remaining hurdle for Magna now was reaching an agreement with GM.

Magna's founder and chairman, Frank Stronach, met with GM Chief Executive Fritz Henderson on Monday in Detroit to discuss some of the last issues of contention between the two.

The Canadian group's improved offer comes after a government-sponsored evaluation of the bids by investment boutique Lazard suggested RHJ had a slight advantage, since it offered more equity and required substantially fewer loan guarantees.

Germany has expressed a preference for Magna's bid, while sources involved in the negotiations say GM favours RHJ's offer.

A person familiar with RHJ's thinking said the Belgian-based financial investor did not feel Magna's sudden move now put it under pressure to follow up with a sweetened bid.

Managers at GM have pushed for RHJ's offer since it is an easier deal with only one party at the table, that is not interested in a transfer of GM's technology to Russia, and offers the U.S. carmaker the added bonus of potentially buying back majority control of Opel in the future.

DECISION IMMINENT?

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, making no mention of third bidder Beijing Automotive. The Chinese carmaker, that sought access to GM's technology, confirmed a day later that intellectual property issues scuppered its chances.

The endgame of the battle for control of Opel will likely be played out in the Opel Trust, which has formally owned 65 percent of the carmaker ever since GM entered bankruptcy in June and must approve any binding deal.

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.

(Additional reporting by Angelika Gruber and Philipp Halstrick, writing by Paul Carrel, editing by Karen Foster and Rupert Winchester)