RHJI improves bid for Opel as GM and Magna set to meet

RHJI improves bid for Opel as GM and Magna set to meet Berlin - Investment firm RHJ International (RHJI) has improved its bid for Opel, the struggling European arm of General Motors, hours before GM and German- government-backed bidder Magna were set to meet in Detroit.

Sources close to the negotiations confirmed to the German Press Agency dpa on Friday a report by the Frankfurter Allgemeine Zeitung paper (FAZ) that RHJI would now ask for less money from the German government to help it turn Opel around, if its bid was approved.

Until now the German government has let it be known that it favours the bid of Magna, an Austrian-Canadian parts manufacturer, mainly because it would involve fewer job losses.

Although RHJI and Magna are both technically in the running to take over Opel, the expectation that Magna and GM would meet in Detroit later Friday had been seen as an encouraging sign for Magna supporters.

German unions and the governments of all four German states where Opel has factories, have openly endorsed Magna's bid, while GM is thought to prefer RHJI's proposal, leaving open the possibility of a future Opel buyback.

The FAZ report said that RHJI would ask for 3.6 billion euros (5.1 billion dollars) in state aid, as opposed to the earlier figure of 3.8 billion, if it were granted the same licence fees for use of patents as had been offered to Magna.

Magna's offer had involved 4.5 billion euros in state aid.

On Friday Magna reported its fourth straight quarter of losses, posting a net loss of 205 million dollars.

In May, the German government signed a non-binding deal with the Magna consortium, and lent Opel some 1.5 billion euros to stay afloat until a long-term solution to its problems could be found. Magna's consortium includes Russian state-owned bank Sberbank.

GM chief executive Frederick Henderson was due to meet Magna's co- chief executive Siegfried Wolf at GM's headquarters Friday evening to discuss outstanding issues.

GM chief negotiator John Smith said in a blog post Thursday that GM had spent more time with Magna over the previous days because its bid had been "more complex, owing to the inclusion of Russia and a third, Russian-based investor."

Smith added that perhaps "a third" of the outstanding issues relating to Magna's bid had been resolved. Sticking points included intellectual property transfer rights in Russia, advanced technology access, product development responsibilities, and minority shareholder rights, he said.(dpa)