China moves on Opel with BAIC bid

By Angelika Gruber and Christiaan Hetzner

FRANKFURT/MUNICH (Reuters) - A Chinese automaker has offered to buy a stake in General Motors unit Opel, challenging a deal from Canadian auto parts supplier Magna, sources said on Friday.

State-owned Beijing Automotive (BAIC) has submitted an indicative, non-binding offer for Germany's Opel, sources familiar with the situation told Reuters, and would make a binding offer by mid-July.

The news comes ahead of a Friday deadline for GM lawyers to submit papers to U.S. federal bankruptcy Judge Robert Gerber who will rule by July 10 on a plan to create a "new GM" with brands Chevrolet, Cadillac, Buick and truck unit GMC.

Magna, backed by Russian partners, is the frontrunner to buy Opel. Sources told Reuters Thursday that Magna's board of directors wants to approve a business plan for Opel on July 7.

Belgian holding company RHJ International is the third bidder, although it posted a sharply wider full-year loss on Wednesday and analysts are doubtful it has the cash to compete with its rival suitors.

Whoever wins the race for Opel faces a tough antitrust probe, a German government minister said Friday.

When asked whether he counted on Brussels examining any deal for Opel under a lengthier, so-called 'phase II' investigation, German Deputy Economics Minister Jochen Homann told reporters: "Yes, clearly."

He declined to specify what issues might concern EU competition authorities since the German government is still awaiting a business plan for the takeover, which he hoped to get by the end of July.

Any business plans submitted will be evaluated by PriceWaterhouse Coopers on behalf of Berlin, since the government will have to offer more state aid after already extending Opel a six-month 1.5 billion euro ($2.1 billion) bridge loan that matures on November 30.

"Every day that there is no restructuring costs money, every month that goes by is a lost month," said Homann, the head of the government's Opel task force.

Some support may come from Britain, where GM produces and markets Opel cars under the Vauxhall brand.

The British government said Friday it was prepared to support any deal, possibly in the form of loans, if the terms were right.

"I'm not going to discuss the detail of any financial underwriting, but it may involve loans or loan guarantees," Business Secretary Peter Mandelson said. "We would obviously have to have interest paid and some security (for the loans)."

MAGNA DOUBTS

Speaking at a Handelsblatt auto industry conference, Homann expressed skepticism over Magna's concept for Opel and said that vested interests praising the auto parts supplier's offer as the best left the German government open to "extortion."