Magna and its Russian partner Sberbank have reached an agreement in principle with General Motors management over a contract to buy 55 percent of GM's European unit Opel, Magna's co-CEO Siegfried Wolf told Reuters on Thursday.

The boards of GM and Canadian automotive group Magna still must approve a deal before trustees who control 65 percent of Opel and its British sister brand Vauxhall could give their final consent, he said.

At 4:30 this morning Austrian time, an agreement on all issues was reached at a management level between Magna, Sberbank and General Motors, Wolf said, adding one change or the other was made in its more than 600-page-long offer.

We submitted a copy of a final contract that can be signed and implemented. I don't want to be overly optimistic -- and the contract will be certainly be examined in all its aspects -- but roughly speaking there are no unresolved issues with management any more.

The agreement does not necessarily mean that competing Opel bidder RHJ International is out of the running since the Belgian private equity firm has also reached an accord with GM's chief negotiator.

While Magna plans to expand Opel's reach to return to profitability, RHJ aims to shrink Opel. We are still very much in the race, an RHJ spokesman said.

The German task force would decide on the bids at the weekend, but could not rule out a difference of opinion with GM, German Chancellor Angela Merkel said at a conference in Berlin. She said the German government still preferred Magna.

We want a quick decision, and have a clear preference, Merkel said, adding that it was possible a preliminary decision could be made next week.

MAGNA BID

After weeks of hard bargaining, Wolf said his consortium was able to iron out the last details such as access to GM's technology or which markets are open to the new Opel.

Opel would have the freedom to decide where products will be designed and engineered. It would have a say whether certain things can be developed independently without having to pay royalties, such as engines or transmissions designed for specific applications, the Magna co-CEO said.

Magna's Russian industrial partner, GAZ , would also have access to GM's intellectual property and could buy Sberbank's 27.5 percent stake in Opel.

There is no lock-up period in which Sberbank has to hold its stake in 'NewOpel' for a minimum amount of time, but there is a very clear process that requires GM's approval if it were sold to anyone other than GAZ or Russian state bank VEB, Wolf said.

In a compromise, Magna will not take a direct financial interest in GM's Russian business.

Although Opel and Chevrolet share the same dealers in Russia, Magna will not own any equity in the sales and distribution network, but work will be shared in areas like back office in order to make use of synergies, he said.

Both sides agreed that Opel vehicles cannot be sold in the United States or in Korea, where Chevrolet-maker GM Daewoo is based. Opel is also barred from entering Canada for two years.

In a surprise, GM agreed that Opels could be sold in China except for two model lines -- possibly the Insignia and the upcoming Astra -- which can be marketed after five years.

CHEERS IN GERMANY

This is the best solution for Opel and Opel workers, top politicians in the German state of Rhineland-Palatinate, which hosts one of four Opel plants in Germany, said in a statement.

The overwhelming support for Magna in Germany from key figures such as Chancellor Angela Merkel and state leaders suggests that the Opel Trust will likely sign off on a deal with the Canadian auto parts supplier and Sberbank.

GM CEO Fritz Henderson confirmed that Magna submitted a revised offer to GM and the German government's Opel Task Force, which both would evaluate over the next several days.

We need to take that feedback as well as what the German government is prepared to do in terms of financing and brief our board. I anticipate that briefing would be probably next week, Henderson said in Detroit.

RHJ's offer has enjoyed more support in Detroit than in Berlin, but the German role in financing any deal gives Germany significant clout in the decision.

Wolf said the next step was agreeing how to fund the deal, which includes an equity component of 500 million euros and 4.5 billion euros in loans guaranteed by European governments.

We submitted two proposals to the German government that differ in a variety of terms and we are in the middle of negotiations over the exact structure, he said.

Worried about the 25,000 Opel jobs in Germany ahead of an election next month, Berlin put up 1.5 billion euros ($2.1 billion) in bridge finance for a ring-fenced Opel in May, just before the U.S. parent slid briefly into bankruptcy.

Wolf reaffirmed his time frame to turn around the carmaker that could involve roughly 10,000 job cuts across Europe.

We aim to make Opel profitable roughly 24 months after we would assume full responsibility of the carmaker, he said.

(Additional reporting by Sarah Marsh, Anne Jolis, Madeline Chambers and Dmitry Zhdannikov; Editing by David Cowell and Robert MacMillan)

($1=.7008 Euro)

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