SCENARIOS: The hands GM board could deal in Opel poker

FRANKFURT (Reuters) - U.S. carmaker General Motors' GM.UL board of directors is expected to meet on Tuesday and Wednesday to discuss its plans for European automaker Opel.

The German government has put pressure on GM to choose a buyer for Opel this week. Berlin has favored Canadian auto parts maker Magna MGa.TO, while GM is thought to favor either keeping the business or selling to rival bidder RHJ (RHJI.BR).

Here are some possible outcomes of the board meeting:

GM BOARD BACKS MAGNA OFFER

The German government, top politicians in four German states with Opel plants and Opel's 25,000 staff in Germany are pushing for this decision, hoping Magna's expertise in the car business will serve Opel better and save more jobs.

Should GM back a sale to Magna, the federal and state governments in Germany are likely to approve 4.5 billion euros ($6.45 billion) in state aid to keep Opel afloat, then seek contributions from other countries with Opel plants.

It remains to be seen whether Opel staff in other European countries such as Britain, Spain and Belgium will be as keen to embrace Magna, given its cost-cutting plans.

The British government, with an eye on the GM brand Vauxhall's operations, has said the decision "should not be distorted by political considerations in any one country."

GM BOARD RECOMMENDS RHJ

RHJ last week raised the stakes by sweetening its bid for Opel. The Brussels-listed company said it was now offering 300 million euros in cash for a 50.1 percent stake in Opel, 25 million more than its first bid made on July 20.

RHJ also said it would ask for only 3.2 billion euros in state aid, 600 million less than initially planned.

GM's top negotiator for the Opel deal, John Smith, has repeatedly cited the positive aspects of RHJ's offer, which he says would be easier to implement than Magna's plan and require less taxpayer money.

Sources at GM have said RHJ, which is linked to Tim Collins' Ripplewood buyout group, could grant GM a right of first offer as part of a deal.

The German government has so far refused to back a bid from RHJ.

GM SEEKS TO KEEP OPEL

Sources familiar with the negotiations have told Reuters that GM was considering dropping plans to relinquish control of Opel altogether and instead raise $4 billion to keep the unit.

GM is no longer barred from using funding from the U.S. government to support its international operations, but taking this route could trigger a domestic political storm.

GM could also raise money by selling or mortgaging the automaker's assets in China, one source said.

Berlin has said it would provide billions of euros in aid to Opel only if GM selects Magna. There are big questions about whether GM could come up with the funds it would need if it decided not to sell its European unit.

Such a step would also mean GM would have to refinance a 1.5 billion euro bridge loan granted by the German government. The company could not count on European state aid for the billions needed to reorganize Opel.

GM POSTPONES DECISION UNTIL AFTER GERMAN ELECTIONS

German Chancellor Angela Merkel is facing a federal election on September 27, and analysts and officials have said it seemed increasingly unlikely a decision on Opel would come before then.

After the vote, the political stakes would be lower, giving Berlin more flexibility in negotiations, but even then Merkel would be under substantial pressure not to change tack from powerful conservative allies in states where Opel has plants.

Some analysts have speculated that GM's board was 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.

(Reporting by Angelika Gruber and Maria Sheahan; editing by John Stonestreet)