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GM to sell Hummer to Chinese company

2009-06-03 09:04 BJT

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DETROIT/NEW YORK -- General Motors Corp said on Tuesday it reached a tentative deal to sell its Hummer brand to a privately held Chinese company, part of an effort to drop four unprofitable vehicle lines and leave bankruptcy as a leaner company.

GM, a day after filing for bankruptcy, said in a statement that it reached a memorandum of understanding with Sichuan Tengzhong Heavy Industrial Machinery Co for the sale. Tengzhong said it will retain Hummer's senior management and operational team.

GM said Tengzhong will also enter into a long-term contract assembly and key component and material supply agreement with GM.

Under the deal, which is subject to regulatory review and is expected to close in the third quarter, Tengzhong will assume Hummer's existing dealer agreements.

Financial terms were still under discussion and will not be disclosed, GM said. Bankers have said Hummer could fetch about $100 million in cash in addition to other commitments.

The deal marks the first time that a Chinese buyer has acquired a brand from one of the struggling US automakers.

Chinese parts suppliers and automakers have shopped for US automotive assets, including those at also-bankrupt Chrysler LLC, but no deals have been completed despite the enormous pressure on US automakers in recent years to cut costs.

Based in the Chinese province of Sichuan, Tengzhong makes special-use vehicles, highway and bridge structural components, construction machinery, and energy facilities.