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Now that it has emerged from bankruptcy and received free money from the Federal Government, General Motors is seriously thinking about keeping Opel by raising capital. The German government has been urging GM to make a decision about the bids it received for GM Europe from Magna (NYSE:MGA), the Germans’ preferred bidder. But, the company has dragged its feet. We now know why.

According to the FT, one plan has GM stiff-arming the German government and raising 3 billion euros of capital.

The US carmaker and its advisers are studying a scenario that would see GM abandon the German plan and instead raise roughly €3bn ($4.3bn) of rescue funds for Opel and its British Vauxhall brand from the US and other European governments, including the UK and Spain.

I can’t imagine this sits well with the Germans as they should feel like GM has not exactly considered them at all in its plans. This is certainly going to have repercussions for German elections coming forward. The FT says:

Were GM to abandon the German-backed sale process, it would be an embarrassment for Angela Merkel’s government.

As for GM, it does seem to be a good move. Having secured huge concessions from unions and bondholders, the company is in better shape. What’s more, it has received direct aide from the U.S. and Canadian governments and is further benefitting from government largesse due to the just-ended Cash for Clunkers scheme.

With equity markets soaring, I bet they could even try raising money in the capital markets.

Source: GM Seriously Considers Keeping Opel, Raising Capital