DETROIT – A person briefed on the deal says General Motors Corp. has a tentative agreement to sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co. of China.
GM
announced Tuesday that it has a memorandum of understanding to sell the
brand of rugged SUVs, but the company didn't disclose the buyer.
announced Tuesday that it has a memorandum of understanding to sell the
brand of rugged SUVs, but the company didn't disclose the buyer.
A formal announcement of the buyer's identity was to be made Tuesday afternoon.
Sichuan
Tengzhong deals in road construction, plastics, resins and other
industrial products, but the person briefed on the deal says Hummer
would be its first step into the automotive business. The person spoke
on condition of anonymity because the details have not been made public.
Tengzhong deals in road construction, plastics, resins and other
industrial products, but the person briefed on the deal says Hummer
would be its first step into the automotive business. The person spoke
on condition of anonymity because the details have not been made public.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW YORK
(AP) — General Motors Corp. took a key step toward its downsizing on
Tuesday, striking a tentative deal to sell its Hummer brand, while also
revealing that it has potential buyers for its Saturn and Saab brands.
(AP) — General Motors Corp. took a key step toward its downsizing on
Tuesday, striking a tentative deal to sell its Hummer brand, while also
revealing that it has potential buyers for its Saturn and Saab brands.
Detroit-based
GM said it has reached a memorandum of understanding with a buyer for
Hummer, though it did not name the buyer or the price. The automaker
said the sale will likely save more than 3,000 U.S. jobs in
manufacturing, engineering and at various Hummer dealerships.
GM said it has reached a memorandum of understanding with a buyer for
Hummer, though it did not name the buyer or the price. The automaker
said the sale will likely save more than 3,000 U.S. jobs in
manufacturing, engineering and at various Hummer dealerships.
"We're
not today in a position to be able to identify a buyer. It was part of
the agreement," GM Chief Executive Fritz Henderson told CBS's "The Early Show." "We believe the buyer is quite capable of closing."
not today in a position to be able to identify a buyer. It was part of
the agreement," GM Chief Executive Fritz Henderson told CBS's "The Early Show." "We believe the buyer is quite capable of closing."
As
part of the proposed transaction, GM said, Hummer will continue to
contract vehicle manufacturing and business services from GM during a
transitional period. For example, under the proposed agreement, GM's
Shreveport Assembly plant would continue to contract to assemble the H3
and H3T Hummers through at least 2010.
part of the proposed transaction, GM said, Hummer will continue to
contract vehicle manufacturing and business services from GM during a
transitional period. For example, under the proposed agreement, GM's
Shreveport Assembly plant would continue to contract to assemble the H3
and H3T Hummers through at least 2010.
The
automaker also said Tuesday that it has 16 buyers interested in
purchasing its Saturn brand, while three parties are interested in the
Swedish Saab brand.
automaker also said Tuesday that it has 16 buyers interested in
purchasing its Saturn brand, while three parties are interested in the
Swedish Saab brand.
Chief Financial Officer Ray
Young told reporters and industry analysts on a conference call that GM
is continuing to pursue manufacturing agreements with a new Saturn
buyer.
Young told reporters and industry analysts on a conference call that GM
is continuing to pursue manufacturing agreements with a new Saturn
buyer.
GM would like to sell the money-losing Saturn brand's
dealership network, contracting with the new buyer to make some of its
cars while the buyer gets other vehicles from different manufacturers.
dealership network, contracting with the new buyer to make some of its
cars while the buyer gets other vehicles from different manufacturers.
At the same time, bridge loan discussions with the Swedish government are progressing, Young said.
GM, which filed for Chapter 11 bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. It is hoping to follow the lead of fellow U.S. automaker Chrysler LLC
by transforming its most profitable assets into a new company in just
30 days and emerging from bankruptcy protection soon after.
by transforming its most profitable assets into a new company in just
30 days and emerging from bankruptcy protection soon after.
But GM is much larger and complex than its Auburn Hills, Mich.-based rival and isn't up against Chrysler LLC's tight June 15 deadline with Fiat.
Sharon Lindstrom, managing director at business consulting firm Protiviti, said the companies pose different challenges. But as with Chrysler, she notes that the Treasury Department made sure many of GM's moving parts were in order ahead of time so a quick bankruptcy reorganization might be possible.
"They
had a lot of their ducks in a row because the terms of the government
financing forced them to get all the parties to the table in a very,
very short period of time," Lindstrom said.
had a lot of their ducks in a row because the terms of the government
financing forced them to get all the parties to the table in a very,
very short period of time," Lindstrom said.
In addition to its
plan to sell the Hummer, Saab and Saturn brands. GM will also phase out
its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and
GMC nameplates.
plan to sell the Hummer, Saab and Saturn brands. GM will also phase out
its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and
GMC nameplates.
Separately, the German government on Tuesday said it paid out the first euro300 million ($425 million) in bridge loans
to GM's Adam Opel GmbH division. The loans are part of a deal to shrink
GM's stake in Opel and shield it from GM's bankruptcy protection filing
in the U.S.
to GM's Adam Opel GmbH division. The loans are part of a deal to shrink
GM's stake in Opel and shield it from GM's bankruptcy protection filing
in the U.S.
Over the weekend, the German government agreed to
lend Opel $2.1 billion. The loans are part of a deal in which Canadian
auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 percent of the company.
lend Opel $2.1 billion. The loans are part of a deal in which Canadian
auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 percent of the company.
A
sale of the Hummer brand had been expected. Chief Executive Fritz
Henderson had said in April that the automaker was expecting final bids
from three potential buyers within the month.
sale of the Hummer brand had been expected. Chief Executive Fritz
Henderson had said in April that the automaker was expecting final bids
from three potential buyers within the month.
GM nailed down deals with its union and a majority of its bondholders and arranged to sell off most of its Opel operations in Europe in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.
The
government has said it expects GM to come out of bankruptcy protection
within 60 to 90 days. By comparison, the judge overseeing Chrysler's
case approved the sale of its assets to a group led by Italy's Fiat
Group SpA in just over a month. Some industry observers think Chrysler could emerge as early as this week.
government has said it expects GM to come out of bankruptcy protection
within 60 to 90 days. By comparison, the judge overseeing Chrysler's
case approved the sale of its assets to a group led by Italy's Fiat
Group SpA in just over a month. Some industry observers think Chrysler could emerge as early as this week.
During
Monday's hearing GM Attorney Harvey Miller stressed the magnitude of
the case and the importance of moving GM through court oversight as
fast as possible. He noted that the automaker only has about $2 billion
in cash left.
Monday's hearing GM Attorney Harvey Miller stressed the magnitude of
the case and the importance of moving GM through court oversight as
fast as possible. He noted that the automaker only has about $2 billion
in cash left.
"If there's going to be a recovery of value, it's
absolutely crucial that a sale take place as soon as possible," Miller
said in his opening statement.
absolutely crucial that a sale take place as soon as possible," Miller
said in his opening statement.
The automaker wants to sell the
bulk of its assets to a new company in which the U.S. government will
take a 60 percent ownership stake. The Canadian government would take
12.5 percent of the "New GM," with the United Auto Workers union getting 17.5 percent and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.
bulk of its assets to a new company in which the U.S. government will
take a 60 percent ownership stake. The Canadian government would take
12.5 percent of the "New GM," with the United Auto Workers union getting 17.5 percent and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.
Attorneys
for GM stakeholders packed the stuffy courtroom well ahead of the
automaker's first-day Chapter 11 hearing. U.S. Judge Robert Gerber
moved swiftly through the agenda's more than 25 mostly procedural
motions.
for GM stakeholders packed the stuffy courtroom well ahead of the
automaker's first-day Chapter 11 hearing. U.S. Judge Robert Gerber
moved swiftly through the agenda's more than 25 mostly procedural
motions.
Gerber set GM's sale hearing for June 30, putting it on
a path similar to that of Chrysler. Objections are due on June 19, with
any competing bids required to be submitted by June 22.
a path similar to that of Chrysler. Objections are due on June 19, with
any competing bids required to be submitted by June 22.
Gerber
also gave GM immediate access to $15 billion in government financing to
get it through the next few weeks, and interim approval for use of a
total $33.3 billion in financing, with final approval slated to be
ruled on June 25. The funds are contingent on GM's sale being approved
by July 10. Gerber also approved motions allowing the company to pay
certain prebankruptcy wages, along with supplier and shipping costs.
also gave GM immediate access to $15 billion in government financing to
get it through the next few weeks, and interim approval for use of a
total $33.3 billion in financing, with final approval slated to be
ruled on June 25. The funds are contingent on GM's sale being approved
by July 10. Gerber also approved motions allowing the company to pay
certain prebankruptcy wages, along with supplier and shipping costs.
The sheer size of GM makes it a more complicated case than Chrysler.
GM
made twice as many vehicles as Chrysler's 1.5 million last year and
employs 235,000 people compared with Chrysler's 54,000. GM also has
plants and operations in many more countries, meaning it will likely
have to strike separate deals to navigate the bankruptcy laws of those
places.
made twice as many vehicles as Chrysler's 1.5 million last year and
employs 235,000 people compared with Chrysler's 54,000. GM also has
plants and operations in many more countries, meaning it will likely
have to strike separate deals to navigate the bankruptcy laws of those
places.
GM Chief Executive Fritz Henderson said GM has learned a few things by watching Chrysler's case.
"Certainly
the court showed that it can address 363 (sale) transactions in an
expeditious fashion," Henderson said at a press conference Monday.
"Particularly in our case with what will be a very large 363
transaction."
the court showed that it can address 363 (sale) transactions in an
expeditious fashion," Henderson said at a press conference Monday.
"Particularly in our case with what will be a very large 363
transaction."
GM's filing for Chapter 11 bankruptcy protection
is the largest ever for an industrial company. GM, which said it has
$172.81 billion in debt and $82.29 billion in assets, had received
about $20 billion in low-interest loans before entering bankruptcy
protection.
is the largest ever for an industrial company. GM, which said it has
$172.81 billion in debt and $82.29 billion in assets, had received
about $20 billion in low-interest loans before entering bankruptcy
protection.
___
Associated Press writers Tom Krisher in Detroit and Joe McDonald in Beijing contributed to this report.
