General Motors Co.’s bankruptcy estate seeks approval of a settlement that would set aside $773 million of U.S. money to resolve environmental claims by the federal government and 14 states, Bloomberg reported.

A mixture of cash and assets, put into trusts, would clean up and administer 89 properties, 59 of which are known to be contaminated, Gary Grindler, acting deputy attorney general, said in a statement. A 30-day period to gather public comment will precede a request for bankruptcy court approval.

More than half the money would go for sites in New York and Michigan, Grindler said.

The St. Regis Mohawk Tribe, the U.S. Environmental Protection Agency and the states are part of the settlement. The tribe has yet to accept the proposal. A public hearing is scheduled for tonight.

The accord paves the way for the carmakers’ unwanted business to wind down in bankruptcy on the eve of a hearing tomorrow at which the Old GM estate will seek court approval of terms of its liquidation.

When GM filed for bankruptcy in June 2009, it sold attractive assets to a newly formed company and left the 89 properties at issue in today’s settlement under bankruptcy protection.

The U.S. Treasury and Canada’s export credit agency had lent the bankrupt estate $1.175 billion to wind down the bankrupt properties. The EPA later filed claims in the case for environmental cleanup costs, as did the states.

Money for the settlement will come from past government loans to the automaker, said Tim Yost, a spokesman for the estate.

U.S. Bankruptcy Judge Robert Gerber in New York in May gave the company a four-month extension of time in Chapter 11 to resolve environmental and asbestos liabilities.

Two units of the carmaker formed to hold environmental liabilities owed about $1.2 billion in cleanup costs, according to court papers. The amount set aside by Old GM is the largest of recent environmental settlements.

Chrysler Corp.’s old estate in bankruptcy set aside $15 million for cleanup costs at polluted properties. Lyondell Chemical Co. resolved an estimated $5.5 billion in environmental liabilities with about $170 million, according to court papers.

Old GM’s settlement includes $641 million in cash and non- cash assets worth $120 million. It has paid $11.5 million to clean properties during its bankruptcy.

As General Motors Co. gears up to pitch its initial public offering to investors this fall, one of the tougher tasks it faces is making the case that its Opel operations in Europe can be fixed, The Wall Street Journal reported.

While the U.S. auto maker has reported two consecutive quarters of profit since emerging from bankruptcy last year, its Opel/Vauxhall unit—the backbone of GM’s European operations—continues to lose money and remains caught between high production costs and a brand image badly bruised by nearly two years of financial uncertainty.

Opel’s market share keeps sliding in an already declining European car market, adding to pressure on GM and Opel’s management to show would-be investors that it has an effective turnaround strategy for Europe in place.

Opel’s chief executive, Nick Reilly, said the carmaker is sticking to its plan to break even by 2011 and to return to profitability by 2012, and may even do so ahead of schedule should European car sales rebound more quickly than expected.

“Of course I am ambitious and want to do better than what is planned,” he said, adding that “GM’s new management is supporting us.”

In the second quarter, GM Europe, which also includes the European business of Chevrolet and other GM brands, narrowed its loss to $200 million after posting a $500 million deficit in the year’s first quarter. Still, that equaled a loss of $483 on each vehicle the European arm sold. GM itself posted a second-quarter profit of $1.3 billion, its best quarterly result in six years.

The biggest trouble spot is Germany, Opel’s home base and largest market. Car registration figures released last week show new registrations for Opels in Germany have fallen 39% through August of this year.

While total German car sales are down by more than a quarter this year—the hangover effect of the country’s hefty 2009 scrappage subsidies—Opel’s drop is the steepest of any domestic manufacturer. It comes despite the recent launch of a new version of one of Opel’s best sellers, the five-door Astra hatchback.

As a result, its German market share has slipped to 7.7 percent from 9 percent in 2009. Across Western Europe, Opel’s share fell to 7 percent through the year’s first half, down from 7.4 percent last year, according to the ACEA European Automobile Manufacturers’ Association.

“They’re going to have a hard time in [stock promotion] road shows in discussing why, when they were divesting as much as they could, they didn’t sell Opel,” said Scott Sweet, senior managing partner of IPO Boutique, a Tampa, Fla., IPO advisory firm.

GM last November decided at the 11th hour to pull out of a deal, crafted under pressure from the German government, to sell Opel to a Canadian-Russian consortium. Daniel Akerson, GM’s new chief executive, had a central role in the move to abandon the sale as he and other board members concluded Opel played too critical a role as GM’s beachhead in Europe and a key center of its engineering know-how, particularly in small and compact and cars, to let it go.

Most analysts agree with that assessment but say Opel faces a daunting battle in returning to sustainable profitability.

Even in the midst of a broad restructuring that involves shedding 8,000 jobs, all but one of Opel’s 13 plants will stay open and most of its production will remain concentrated in relatively high-cost Western Europe.

Despite plans to move into new markets such as China and Israel, the auto maker said it would take considerable time to build a substantial presence outside Europe.

And Opel lacks the image or products to command higher prices charged by rivals such as BMW AG to help boost its profit margins, said Jürgen Pieper, an auto analyst at Bankhaus Metzler in Frankfurt.

“There are only so many ways for a company like Opel [to improve profitability] and none are readily available,” the analyst said. “In a European market on the upswing they can probably make a small profit, but every four or five years they will be facing the same tough questions again.”

Analysts and dealers say Opel’s most pressing problem is restoring its image, particularly in Germany, where it has been battered by months of questions over its survival, ownership and financing for its turnaround.

In June, GM announced it would fund Opel’s €3.3 billion ($4.3 billion) restructuring on its own, but not before months of delays and, ultimately, rejection by the German government of the car maker’s appeal for more than €1 billion in state aid.

“After so much uncertainty for so long, naturally a lot of customers stayed away,” said Thomas Bieling, who co-heads the German association of Opel dealers.

To lure back customers and motivate dealers, Opel is investing in new models, including a smaller city car expected to be launched in 2013. And it’s banking on its Ampera extended-range electric car, a European cousin to the Chevrolet Volt, which is due out in late 2011.

Opel also recently unveiled a “lifetime” car warranty, which effectively is limited to 160,000 kilometers (99,424 miles), though with no time restrictions. That attracted the ire of a nongovernmental competition watchdog, which last week sued Opel for what it called misleading advertising. Bieling, though, said the guarantee has been popular with dealers and buyers.

Reilly said the company has no plans to change the guarantee campaign. “But of course the competition doesn’t like the campaign at all,” he said.

NEW YORK – The U.S. government is likely to take a loss on General Motors Co. in the first offering of the automaker’s stock, six people familiar with preparations for the landmark IPO told Reuters.

Subsequent offerings of the government’s holdings may be profitable depending on how investors trade the newly listed stock, the sources said.

But the question of whether taxpayers are ultimately made whole on GM’s $50 billion bailout could be left open for years, the people said.

It could take more than three years for the Treasury to sell down its remaining stake in GM after the IPO, one person said. That would push a final accounting into the next presidential term.

A decision to price the initial GM shares below the cost to taxpayers would follow the usual Wall Street practice of giving the first investors in a new stock a discount, but it could also help allay investor concern in the face of the slow recovery of the U.S. economy and flat auto sales.

Preparations for GM’s IP0 remain confidential. Both GM and the U.S. Treasury have declined to comment, citing restrictions by U.S. securities regulators.

The Obama administration has pledged to exit its investment in GM as quickly as possible while holding out the prospect that taxpayers could ultimately be paid back in full.

Treasury spokesman Mark Paustenbach declined to comment. GM spokesman Tom Wilkinson also declined to comment.

GM plans to begin a roadshow for its IPO immediately after the November 2 U.S. midterm congressional elections, paving the way for a stock debut on November 18, sources have said.

GM in August filed paperwork for an IPO that could potentially be worth as much as $20 billion, making it one of the biggest IPOs of all time.

The U.S. Securities and Exchange Commission is now reviewing the automaker’s S-1 filing.

Analysts and potential investors have projected a market value for GM of between $50 billion to around $90 billion, based on projections for the automaker’s cash flow, comparisons with rival Ford Motor Co and trading in bonds in the old GM which are convertible into shares in the new company.

A market value at the high end of that range would be above the roughly $70 billion in market capitalization that GM needs to achieve for the U.S. government to break even on its $43 billion remaining investment in the automaker.

But IPOs typically price at a discount of 10 percent to 15 percent to theoretical fair value to reward investors for taking a risk on a new issue and pave the way for future stock floats. In tough market conditions, that discount can be even larger.

“You have to sell people on the notion that there is an upside to what they are buying,” one of the sources said.

Another of the sources said the discount could be as much as 20 percent on the GM IPO compared with the U.S. Treasury’s break-even point.

Preparations for the GM stock offering remain in the early stages. A number of the sources cautioned that the size and value of the deal and the size of the stake to be sold by the U.S. government have not been determined and will not be set for weeks.

The U.S. Treasury is concerned about how many overseas investors it should allow to buy big stakes in General Motors Co. through the carmaker’s initial public offering this fall, people familiar with the matter told The Wall Street Journal.

The caution—aimed at minimizing any political fallout from the massive stock sale—could involve limiting or being selective about which non-U.S. investors such as sovereign-wealth funds would be invited to be “cornerstone” investors in the IPO, said these people.

Cornerstone investors typically are recruited to commit to buying and holding a large stake at a set share price as a show of confidence intended to draw in other investors. In exchange, they sometimes get a better price on the stock.

Sovereign-wealth funds and other overseas investors hold big stakes in many major U.S. companies. But the issue is touchy for GM, since U.S. taxpayers poured $50 billion into the car maker last year to fund its bankruptcy reorganization. The Treasury would begin to sell its shares through the IPO.

A decision on to what extent such overseas groups will be allowed as cornerstone investors in the IPO is expected within the next couple of weeks, these people said.

A larger group of cornerstone investors could clear the way for the Treasury to offload a bigger piece of its 61% stake in GM through the stock sale, which is planned for mid-November. GM and the banks underwriting the deal are pushing for the biggest possible investor pool to increase the size of the stock offering, which will likely involve stakes in the car maker sold by the Treasury, a union-managed retiree trust fund and Canadian governments.

The company would like to eliminate the U.S. stake as soon as possible since it has dissuaded some potential customers from buying its vehicles. But the Treasury wants to hold out for the best possible price for its stake in an effort to make the government whole on its investment or even make a profit. That might involve the U.S. selling less of its stake this fall and more over time.

To have cornerstone investors in place in time for the IPO, GM would need to have a plan in place in the next couple weeks, said the people familiar with the matter.

The automaker plans to launch a “road show,” in which it would pitch the IPO to investors, immediately after the Nov. 2 midterm elections, with a goal of holding the offering before the end of November, people familiar with the plans said.

That time frame would give GM a chance to include its third-quarter performance as part of its pitch. The company, which made $1.3 billion in the second quarter, its largest quarterly profit in six years, has said it expects to continue to make money in the year’s second half, though the profits will be slimmer.

A key part of the road-show message will be an assurance that new Chief Executive Dan Akerson will remain with the company for several years, according to people familiar with the matter. Akerson took over as CEO on Wednesday, succeeding Edward E. Whitacre Jr.

The 61-year-old Akerson told the board he would stay from two to five years, or possibly longer, said people familiar with the matter. Whitacre was unwilling to make that commitment, leading to his announcement last month that he would step down as CEO this week and as chairman by year’s end.

GM’s board felt it was critical to present a long-term CEO to investors as part of its IPO pitch.

Akerson, known for his work as a telecommunications deal-maker, is GM’s fourth CEO in less than two years. He had been named by the government to the company’s board last summer. Akerson’s compensation package will likely include financial incentives that kick in after a few years on the job as a way to signal he intends to stay.

On Thursday, Akerson sent a Labor Day-timed message to employees in which he said he had met recently with United Auto Workers President Bob King and is confident the carmaker and union can work together.

Describing a meeting with Mr. King and UAW Vice President Joe Ashton, Akerson said, “While we will not always see eye to eye on everything, GM will succeed to the extent that management and labor work together.”