Berlin - Talks over the future of giant US carmaker General Motors Corp's (GM) troubled European Opel offshoot are entering their final stage with Germany setting out tough financial requirements for GM in a letter in the hands of the German Press Agency dpa.

Drawn up by Germany federal and state governments, the letter calls on GM to help deal with a possible 1.2-billion-euro (1.7 million dollar) deficit at Opel as well as freezing dividends to a new revamped Opel's shareholders until after German state-back loans repaid by 2014.

"The German Governments will further require that any dividends to shareholders (including preferred dividends) will only be distributed and paid after the full repayment of the loans," the letter said. The governments also said that GM officials had estimated Opel could face a 1.2-billion-euro equity deficiency by the end of 2010.

"In the context of any agreement with an investor, we expect a further contribution of GM in terms of risk sharing, i. e. in the event that the servicing of the loans is at risk, we demand that royalty payments of the NewOpel to GM are deferred," the letter said.

The governments' letter to GM comes as the Detroit-based car group prepares to hold talks in the US with the Canadian-Austrian auto supplier group Magna International Inc over taking out a majority stake in a new restructured Opel group.

The Magna-led bid, which has emerged as the German governments' preferred option, also includes the Russian state-bank Sberbank and Russian carmaker GAZ.

But GM has not ruled out holding talks with the other Opel bidder, Brussels-based private equity group RHJ International, as it attempts to finalize the future ownership of its European business, which includes operations in both Opel and British Vauxhall car brands.

A recommendation from the GM board on the future of Opel's new ownership structure could come as early as the weekend.

However, the final decision on Opel's new structure rests with a German Government-backed trust which is due to meet next week.

GM is hiving off a majority stake in its European operations after slumping sales forced it to embark on a major overhaul of its global business.

The current talks on the future of Opel, which has operations in four German states, comes as Germany gears up for a national election set down for September 27.

In their letter, the German governments also seek additional details on the purchase price to be included in the Opel transaction.

The governments also insist that in the event of a change in ownership at Opel or if the carmaker is forced into insolvency that technology licensing arrangements should not include any "extraordinary termination rights" which would benefit GM.

In addition, the governments told GM that a final financing agreement for Opel would have to be approved by the European Commission in Brussels. (dpa)