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Sichuan Auto eyes GM's Hummer unit
By Cathy Chan |
February 17, 2009, Tuesday
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Print Edition
Print Edition
Sichuan Auto Industry Group Co, one of the smallest car makers in China, is in talks competing to buy General Motor Corp's Hummer sport-utility vehicle unit, three people familiar with the matter said.
Sichuan Auto, which has about 1 billion yuan (US$146 million) in assets according to its Website, may pay up to US$500 million for the unit, the people told Bloomberg News.
The company plans to get financing from state-owned banks, the people said.
GM, whose Hummer sales plunged 60 percent last month, must raise cash and cut its debt to receive a US$13.4-billion emergency aid package from the United States government. Sichuan Auto and other Chinese car makers may buy car brands and technology to help expand beyond the domestic market.
Other companies may also bid for Hummer, one of the people said.
Closely held Sichuan Auto isn't among the 79 major auto makers in China ranked by assets, according to the China Association of Automobile Manufacturers. Zhou Liya, a sales official with Sichuan Auto, said he is not aware of its bidding for Hummer.
"Meetings and discussions with potential investors are ongoing," Henry Wong, GM's Shanghai-based spokesman, wrote in an e-mail. "We will not discuss whom the potential investors are."
The sale would help GM keep loans from the US government as it has until today to show its future viability to the US Treasury. If the biggest US auto maker can't prove it is able to return to profit, it could be told to give up the loans or use the cash for a government-funded bankruptcy.
GM had sought to raise US$4 billion by shedding assets, a goal that the auto maker said in December had been hampered by the September bankruptcy of Lehman Brothers Holdings Inc, which deepened the global credit crunch.
Chief Executive Officer Rick Wagoner said GM was considering options for Hummer, including a sale, at the June 3 shareholders' meeting as record fuel prices prompted the auto maker to shift its focus to more fuel-efficient cars away from light trucks.
Sichuan Auto has the capacity to make 5,000 buses, 30,000 passenger vehicles and 50,000 engines a year, according to its Website. Set up in May 1994, it was bought in August 2006 by Fulin Group, a real estate developer.
Sichuan Auto, which has about 1 billion yuan (US$146 million) in assets according to its Website, may pay up to US$500 million for the unit, the people told Bloomberg News.
The company plans to get financing from state-owned banks, the people said.
GM, whose Hummer sales plunged 60 percent last month, must raise cash and cut its debt to receive a US$13.4-billion emergency aid package from the United States government. Sichuan Auto and other Chinese car makers may buy car brands and technology to help expand beyond the domestic market.
Other companies may also bid for Hummer, one of the people said.
Closely held Sichuan Auto isn't among the 79 major auto makers in China ranked by assets, according to the China Association of Automobile Manufacturers. Zhou Liya, a sales official with Sichuan Auto, said he is not aware of its bidding for Hummer.
"Meetings and discussions with potential investors are ongoing," Henry Wong, GM's Shanghai-based spokesman, wrote in an e-mail. "We will not discuss whom the potential investors are."
The sale would help GM keep loans from the US government as it has until today to show its future viability to the US Treasury. If the biggest US auto maker can't prove it is able to return to profit, it could be told to give up the loans or use the cash for a government-funded bankruptcy.
GM had sought to raise US$4 billion by shedding assets, a goal that the auto maker said in December had been hampered by the September bankruptcy of Lehman Brothers Holdings Inc, which deepened the global credit crunch.
Chief Executive Officer Rick Wagoner said GM was considering options for Hummer, including a sale, at the June 3 shareholders' meeting as record fuel prices prompted the auto maker to shift its focus to more fuel-efficient cars away from light trucks.
Sichuan Auto has the capacity to make 5,000 buses, 30,000 passenger vehicles and 50,000 engines a year, according to its Website. Set up in May 1994, it was bought in August 2006 by Fulin Group, a real estate developer.
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