Belgian finance investor RHJ International (RHJI.BR) raised the stakes in the ongoing bidding war with rival Magna (MGa.TO) for GM's GM.UL Opel unit, as sources said the U.S. automaker's board was due to discuss the deal.
A spokesman for RHJ confirmed on Tuesday it had informed GM in a letter that it would now offer 300 million euros ($431 million) in cash for a 50.1 percent stake in Opel, 25 million euros more than it first bid on July 20.
Moreover, the firm that was spun off from U.S. buyout group Ripplewood would ask for only 3.2 billion euros in state aid.
Since it now needs 600 million euros less than before, the spokesman explained RHJ could pay back the loans by 2013, a full year earlier than initially planned when RHJ still calculated with 3.8 billion.
RHJ had already stated it was trying to optimize the financial aspect of its offer and it will continue to make every effort wherever possible to reduce the impact on German and European taxpayers without making any new cuts in employment, planned investments or anything else, the RHJ spokesman said.
No changes had been made to the industrial elements of the bid as a result of RHJ's new bid arithmetic, the spokesman continued.
For one, RHJ has based its calculations on the same, lower royalty costs that Magna was granted, he said, explaining that the Brussels-based group had gone through Opel's figures with a fine-tooth comb and discovered after thorough examination it could achieve a turnaround at Opel with less money after all.
Separately, two people familiar with the matter said GM's board of directors was expected to discuss Opel's future in a telephone meeting on Tuesday.
There was only a slim chance the meeting might even choose a winner between the European manufacturer's rival suitors, one said, although another source with knowledge of GM's thinking cast doubt on whether the board would in fact even hold a call to discuss the issue.
MERKEL WANTS NEW COALITION PARTNER
A spokeswoman for GM Europe said the company does not comment on the timing of board meetings.
Doubts have emerged over whether a decision would be reached ahead of general elections in Germany on September 27. Both the conservative Christian Democrats and labor-leaning Social Democrats have fought over Opel for political gain.
I hope (a deal) will happen before the vote. We are working toward this goal, Chancellor Angela Merkel told Bayerische Runkfunk radio on Tuesday. Her shaky national unity government comprising the CDU and SPD has heavily favored Magna's bid.
German Economy Minister Karl-Theodor zu Guttenberg said late on Tuesday that he expected GM to make a statement on Opel prior to the election.
Analysts expect Berlin has all but admitted defeat in its attempt to install Magna and its Kremlin-backed partner Sberbank (SBER.RTS) as majority owners of Opel against the will of GM's management and its $50 billion benefactor, the U.S. government.
Some experts speculate that GM's board is holding off on formally approving management's preferred bidder, RHJ, so as not to cause Merkel political embarrassment in the run-up to the election, where she is campaigning to form a new center-right coalition with the pro-business Free Democrats.
GM initially consented to a Magna deal but gradually retreated from that position after emerging in slimmed-down form from 40 days of bankruptcy protection on July 10.
Nearly 25,000 people are employed at one of Opel's four German plants and four times that number in the country are estimated to have jobs that depend on the carmaker, GM's second-largest brand after Chevrolet with an annual output of more than 1 million vehicles.
(Reporting by Angelika Gruber and Christiaan Hetzner, additional reporting Jan Schwartz and by the Berlin news bureau; Editing by John Stonestreet and Maureen Bavdek)