Aug. 25 (Bloomberg) -- General Motors Co. can’t afford to retain control of its Opel division because the carmaker needs to concentrate on the U.S., according to Fred Irwin, chairman of the German government-backed trust created to facilitate a sale.

“They just have to get their house in order and I think they definitely know this,” Irwin said today in a telephone interview from Frankfurt. “GM cannot be too sidetracked with foreign markets” because it needs to become profitable in the U.S. and repay government loans, he added.

Opel, surviving on a 1.5 billion-euro ($2.1 billion) loan from Germany, is controlled by the trust pending the outcome of negotiations over a potential sale. A group led by Magna International Inc. that includes Russia’s Sberbank is competing with RHJ International SA to acquire a majority stake in the carmaker, based in Ruesselsheim, near Frankfurt.

Germany and GM are “not too far off” in settling concerns about financing the competing offers, said Irwin, a Citigroup Inc. banker in Germany. Discussions will continue this week, the German government has said.

Advisers to GM are recommending that the Detroit-based automaker consider spurning a sale of Opel in order to retain a bigger presence in Europe and Russia, a person familiar with the discussions has said. The advisers suggest that GM seek aid from European countries other than Germany to help keep the division, according to the person.

GM hasn’t talked with the trust board about any plans to retain control of Opel, Irwin said.

No Discussion

GM placed Opel under the control of a trust when it filed for U.S. bankruptcy protection in June. The trust owns 65 percent of Opel, with GM holding the remaining 35 percent.

The U.S. carmaker will recommend its preference to the trust’s board, which has to approve any business decisions by Opel, including which bidder will win. A final decision on a sale will be made by GM, which emerged from bankruptcy July 10 and is controlled by the U.S. Treasury.

“I have never heard that point discussed in a trust board meeting or in any government meeting,” Irwin said. GM’s chief negotiator on options for Opel, John Smith, is a member of the trust board.

“We have reasonable people that have the same goal, which is to sell Adam Opel,” said Irwin, who is also president of the American Chamber of Commerce in Germany. “When you have reasonable people with a common goal, then they should come up with a reasonable solution.”

‘Critical Date’

“Dialogue will continue this week amid bells and whistles by the unions,” Irwin said, adding that “everyone loses” if Opel becomes insolvent. German unions and Chancellor Angela Merkel favor a deal with Magna, Canada’s largest auto-parts manufacturer.

The “critical date” for a deal to be agreed is the beginning of the Frankfurt auto show on Sept. 17, he said. Opel, which intends to present a new version of the Astra compact at the event, needs to show up with “their heads held high and full of confidence” in front of their customers, he said.

If a deal is delayed after Sept. 27 German elections, talks with the new government aren’t likely to begin until late October, he said, adding that the “drop-dead date” for a deal is mid-January, when Opel will probably run out of funds.

The other directors of the trust include Dirk Pfeil, a former state lawmaker who now represents Germany’s four states with Opel plants; Manfred Wennemer, chairman of Kohlberg Kravis Roberts & Co.’s Kion Group GmbH and a former Continental AG chief executive officer, who represents the German federal government; Enrico Digirolamo, chief financial officer of GM Europe; and Smith, the GM negotiator. Irwin, the fifth member, is regarded as neutral and doesn’t have a vote.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

Last Updated: August 25, 2009 09:08 EDT