General Motors’ Opel isn’t in immediate danger of running out of cash despite an apparent stalemate over German government support for its possible sale.


The automaker on Wednesday said liquidity at Adam Opel was “stable” while a person familiar with the matter told Dow Jones Newswires Opel and its sister Vauxhall unit here in the UK have enough money to last until the end of the year.


That gives GM breathing space as it reconsiders whether to sell a majority stake amid uncertainty about whether the German government would provide additional financial support for Opel, the report noted.


“At the moment, we are running ahead of our original liquidity outlook,” the source said.


GM’s new board last week rejected a management-backed proposal to sell a majority stake to Magna and Russian partners OAO Sberbank and automaker OAZ Gaz and also told executives to make plans to raise US$4.3bn to rejuvenate the operations, people familiar with the matter told Dow Jones.


German chancellor Angela Merkel yesterday reaffirmed in a TV interview her administration’s preference for a sale to the Magna consortium over a rival offer from Belgian private equity group RHJ International. She also said Berlin hadn’t been consulted on the possibility of GM’s retaining ownership.


“Such a solution has never been proposed to us,” Merkel told news channel N24.


Merkel also said state aid is currently tied to the Magna offer.


According to Dow Jones, and RHJ spokesman said the firm wasn’t seeking aid beyond the EUR1.5bn bridge loan already granted to Opel by Germany while a source said Opel had drawn down EUR1.05bn of that loan.


A decision over the future of GM’s European operations must be made “as soon as possible, but substance must have priority over speed,” Merkel said in the TV interview.


“I think there is a good chance that in the end we will come to an agreement,” she said.


Because the US government has said it will not finance GM’s international operations, Merkel said GM would be dependent on European aid if it wants to keep Opel afloat.


Both bidders had updated their bids and presented contracts that are ready to be signed, a government spokesman told Dow Jones.


GM’s board is not expected to meet again to discuss Opel until early September.


But a final resolution could be postponed again until after the German elections in late September, according to a Reuters source close to the sale process.


Although GM would still prefer to find an investor for Opel, the automaker’s new board is leaning toward a solution that would allow GM to maintain more control, that person said.


“It becomes more and more apparent that GM is trying to hold Opel as closely as possible. GM wants to have maximum flexibility as to the potential of keeping Opel,” the source said.


Part of GM’s caution has centred on the potential for Magna’s Russian partners to use GM technology to develop a competitive threat to its own Chevrolet brand in Russia.


German economy minister Karl-Theodor zu Guttenberg told reporters at a parliamentary budget committee meeting in Berlin that there was no clear date now for an Opel decision.


An agreement will come “when an agreement can be made that holds,” he said.


Worker representatives, like Armin Schild of the IG Metall labour union, fear insolvency as the alternative to a deal.


“I believe there are supporters at GM for three different concepts. The first want Magna, the second RHJ and the third insolvency. That’s why the company is paralysed: there is always two-thirds majority against each concept,” the trade unionist and non-executive Opel director told Reuters.


Italy’s La Republicca newspaper yesterday published a report reviving the interest of Fiat in Opel but Reuters said a deal was seen as highly unlikely since the Italian carmaker pulled out of the bidding in May.


“As our chairman and CEO have said many times, our proposal for Opel stays the same. We don’t intend to modify it,” a source at Fiat told Reuters.


Guttenberg said it could be difficult for GM to come up with the amount of money it needs to hold on to Opel.


“To come up with such a not-insignificant sum after a Chapter 11 proceeding – that’s a big chunk,” he said.


“One would have to look perhaps for support from the American government, which I believe would be holding back after [insurance giant] AIG and other experiences.”


Meanwhile, business daily Financial Times Deutschland said te German government now seemed more open towards the RHJ bid.


Under certain circumstances, Berlin would be ready to accept a takeover by RHJI, sources close to the government told the paper.


Different scenarios are being currently discussed and one option would see RHJI taking over Opel jointly with a “strategic partner” which would provide its own industrial know-how. An internationally active carmaker is said to be a possibility, but a name was not given, the FTD added.