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GM seals Hummer deal and gets 1st payout for Opel unit
By Bree Fowler |
June 3, 2009, Wednesday
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Print Edition
Print Edition
GENERAL Motors Corp took two key steps toward its downsizing yesterday, striking a tentative agreement to sell its Hummer brand and obtaining the first payout of federal loans for its European division.
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 auto maker said the sale will likely save more than 3,000 jobs in the United States and at Hummer dealerships.
"We're not 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."
Separately, the German government yesterday said that it paid out the first 300 million euros (US$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 US.
Over the weekend, the German government agreed to lend GM's Opel unit US$2.1 billion. The loans are necessary to close a deal in which Canadian auto parts maker Magna International Inc and Russian-owned Sberbank will acquire 55 percent of Opel.
GM, which filed for bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner auto maker. It is hoping to follow the lead of fellow US auto maker Chrysler LLC 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 more complex than its Michigan-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.
GM has been trying to sell its Saab and Saturn brands. It will also phase out its Pontiac brand, focusing on its Chevrolet, Cadillac, Buick and GMC brands. A sale of the Hummer brand had been expected. CEO Henderson had said in April that the auto maker 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 so that it could appear in court on Monday with a near-complete plan to quickly emerge with an opportunity to become profitable.
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 auto maker said the sale will likely save more than 3,000 jobs in the United States and at Hummer dealerships.
"We're not 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."
Separately, the German government yesterday said that it paid out the first 300 million euros (US$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 US.
Over the weekend, the German government agreed to lend GM's Opel unit US$2.1 billion. The loans are necessary to close a deal in which Canadian auto parts maker Magna International Inc and Russian-owned Sberbank will acquire 55 percent of Opel.
GM, which filed for bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner auto maker. It is hoping to follow the lead of fellow US auto maker Chrysler LLC 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 more complex than its Michigan-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.
GM has been trying to sell its Saab and Saturn brands. It will also phase out its Pontiac brand, focusing on its Chevrolet, Cadillac, Buick and GMC brands. A sale of the Hummer brand had been expected. CEO Henderson had said in April that the auto maker 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 so that it could appear in court on Monday with a near-complete plan to quickly emerge with an opportunity to become profitable.
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