DETROIT (Reuters) –
General Motors Corp said it reached a tentative deal to sell its Hummer brand, 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 on Tuesday that it was not disclosing the identity of the buyer or the value of the deal under the terms of the agreement.
The deal, which is subject to regulatory review, is expected to close in the third quarter.
The New York Times reported that the buyer was Sichuan Tengzhong Heavy Industrial Machinery Co Ltd, a manufacturing company in western China with ambitions of becoming an automaker.
Such a deal, if confirmed, would mark the first time that a Chinese buyer had acquired an automotive brand from one of the struggling U.S. automakers.
Chinese parts suppliers and automakers have shopped for U.S. automotive assets, including those at also-bankrupt Chrysler LLC, but no deals have been completed despite the enormous pressure on U.S. automakers in recent years to cut costs and raise cash.
GM Chief Financial Officer Ray Young said the buyer found for Hummer after a year-long sale process preferred to remain anonymous for now.
“It was their preference, and we respected that preference,” Young said on a conference call for analysts. GM would reveal the name of the buyer following a definitive agreement, he said.
The Hummer buyer would contract to build the H3 model SUV and the H3T pickup truck at GM's plant in Shreveport, Louisiana, through at least 2010.
In addition, GM said the investor would fund future vehicles for Hummer and invest in alternatives to the heavy gas-guzzling engines that are the hallmark of the brand.
A Chinese buyer for Hummer could face additional scrutiny from politicians or GM's major union if it involved taking over U.S. factories as well, analysts have said.
United Auto Workers President Ron Gettelfinger has previously said he would not have supported a Chinese buyer for Chrysler, which is to be taken over by Italy's Fiat SpA as its best assets are sold out of bankruptcy.
In Shreveport, where 800 workers work on a single-shift building Hummer H3 and H3T models, there was relief that a new buyer would keep the line running for at least a while longer.
“As of today, no one has informed us of who the buyer is,” said Morgan Johnson, president of UAW Local 2166, which represents workers at the GM plant.
“We're just excited that Hummer may live on,” he said.
GM had expected Hummer to fetch more than $500 million when it went up for sale in June 2008.
The automaker said in a court filing on Monday that the sale could not proceed on “reasonable terms” due to tight credit and concerns about GM's financial condition.
Bankers have said Hummer could fetch about $100 million in cash in addition to other commitments. In April, people with knowledge of the sale process, said there were three remaining bidders, none of them established automakers.
Part of the problem has been that the military-derived Hummer has become an emblem of excess, turning consumer tastes against the brand's macho styling and prices that can top $71,000.
U.S. sales were off by more than two-thirds during the first four months of the year.
First seen as multipurpose, off-road military vehicles, Hummers were originally built by AM General. Its first model was the Humvee, built for the military. GM bought the Hummer brand from AM General in 1999.
Citicorp has been financial adviser to GM for the Hummer sale process.
After losing $88 billion since 2005, GM is in the process of cutting debt, workers and brands in bankruptcy.
It is seeking to sell its Saab and Saturn brands by the end of 2009 and plans to discontinue Pontiac by the end of 2010.
That would leave a smaller GM to be rebuilt around the Chevrolet, Cadillac, GMC and Buick brands. Together those account for more than 80 percent of current sales.
(Additional reporting by Jui Chakravorty Das and Chris Kaufman; Editing by Gerald E. McCormick and Patrick Fitzgibbons)