Opel suitors must improve bids - Germany

BERLIN (Reuters) - The two suitors for GM's German unit Opel must improve their bids to win government backing, German Economy Minister Karl-Theodor zu Guttenberg said on Sunday before a Monday GM board meeting likely to focus on Opel. Canadian auto parts maker Magna is battling with RHJ International for control of Opel, in which GM is relinquishing control in return for state support the carmaker needed after filing for bankruptcy protection in June.

BERLIN (Reuters) - The two suitors for GM's German unit Opel must improve their bids to win government backing, German Economy Minister Karl-Theodor zu Guttenberg said on Sunday before a Monday GM board meeting likely to focus on Opel.

Canadian auto parts maker Magna is battling with RHJ International for control of Opel, in which GM is relinquishing control in return for state support the carmaker needed after filing for bankruptcy protection in June.

The German states and federal government have expressed a preference for Magna's bid while sources close to the talks have said GM likes RHJ. Several regional German leaders reaffirmed their backing for Magna at the weekend.

"My concerns are well known," Guttenberg told Bild am Sonntag newspaper on Sunday.

"In the tri-lateral talks with GM, the investors as well as the federal and local German governments, it'll be important to get further improvements that are in taxpayer's interest."

Guttenberg added: "One such improvement could be, for instance, an increase in the investors' capital contribution."

GM's board meets on Monday and industry sources said Opel would likely be discussed. Negotiations between Magna and GM had recently stalled but the their positions have since come closer, said one person familiar with the situation.

Foreign Minister Frank-Walter Steinmeier telephoned GM's chief executive to underscore Germany's expectations for the sale of Opel, a newspaper reported on Saturday.

Without citing sources, mass-circulation newspaper Bild said Steinmeier phoned GM's Fritz Henderson on Friday to say that government financial guarantees would only be available for an investor that was long-term and that would secure jobs.

Steinmeier is also vice chancellor in Chancellor Angela Merkel's grand coalition. The Social Democrat is running against conservative Merkel in the September 27 election.

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.

"The only plan that offers a perspective for the Opel plants in Germany is Magna's," said Dieter Althaus, state premier of Thuringia where one Opel plant is based. He urged Merkel to use her influence with U.S. President Barack Obama for Magna.

Hesse state premier Roland Koch, where Opel's headquarters is based, told the WirtschaftsWoche magazine there would be no German taxpayer money available for RHJ.

Germany has worked hard to make it clear to GM "that there would be no consensus for the financing of an RHJ takeover."