General Motors had one bit of good news after yesterday's bankruptcy lows - that it has signed a Memorandum of Understanding (MoU) with a potential buyer for the Hummer brand.
The company is Sichuan Tengzhong Heavy Industrial Machinery, or Tengzhong for short. The privately-owned Chinese industrial company makes transport, construction and energy industry equipment - so Hummer should fit right in with this heavy artillery.
The companies released a joint statement yesterday, with the CEO of Tengzhong, Yang Yi, all but confirming the sale:
"We will be investing in the HUMMER brand and its research and development capabilities, which will allow HUMMER to better meet demand for new products such as more fuel-efficient vehicles in the U.S," he said.
"The HUMMER brand is synonymous with adventure, freedom and exhilaration, and we plan to continue that heritage by investing in the business, allowing HUMMER to innovate and grow in exciting new ways under the leadership and continuity of its current management team."
GM said about 3,000 American jobs would be secured in the transaction if it goes ahead, and confirmation of the sale is expected in the third quarter.
OFFICIAL PRESS RELEASE
- TENGZHONG IN ADVANCED TALKS TO PURCHASE
HUMMER FROM GM IN STRATEGIC ACQUISITION
Industrial Machinery Company To Invest in Growth and Global Expansion of Premium
Off-Road Vehicle Brand; Deal is Expected to Secure Over 3,000 US Jobs
DETROIT and SICHUAN, June 2, 2009 - Sichuan Tengzhong Heavy Industrial Machinery Co.,
Ltd (Tengzhong) and General Motors Corp. (GM), today confirmed details of their proposed
transaction, pursuant to which, Tengzhong, a major industrial machinery group, will acquire the
rights to the premium off-road HUMMER brand, along with a senior management and operational
team. It will also assume existing dealer agreements relating to HUMMER's dealership network.
It is contemplated that Tengzhong will, as part of the transaction, enter into a long-term contract
assembly and key component and material supply agreement with GM. In an earlier statement,
GM said it expects the deal if successful to secure more than 3,000 US jobs. The final terms of
the deal are subject to final negotiations.
Based in the Chinese province of Sichuan, Tengzhong is a privately-owned company and a
leading domestic manufacturer of road, construction and energy industry equipment. It will
expand into the premium off-road vehicle segment through what will be a strategic acquisition for
Tengzhong and a catalyst for HUMMER's growth in the U.S. and around the world.
"The HUMMER brand is synonymous with adventure, freedom and exhilaration, and we plan to
continue that heritage by investing in the business, allowing HUMMER to innovate and grow in
exciting new ways under the leadership and continuity of its current management team," said
Yang Yi, CEO of Tengzhong. Mr. Yang continued, "We will be investing in the HUMMER brand
and its research and development capabilities, which will allow HUMMER to better meet demand
for new products such as more fuel-efficient vehicles in the U.S."
HUMMER will continue to maintain its headquarters and operations in the U.S., and will continue
to be managed by its existing leadership team. The team intends to expand HUMMER's dealer
network worldwide, particularly into new and underserved markets such as China.
"Today HUMMER is a globally recognized brand with excellent growth prospects, both in terms of
new markets and new products for our existing markets," said James Taylor, HUMMER chief
executive officer. "With Tengzhong's investment and strong support, we will be able to make our
visions a reality. This transaction, if successful, will secure more than 3,000 U.S. jobs, and allow
us to embark on a more aggressive global expansion, ensuring a successful future with our new
The transaction is expected to close in the third quarter of this year and is subject to customary
closing conditions and regulatory approvals. Financial terms of the agreement will not be
disclosed at this time.
Credit Suisse is acting as exclusive financial advisor and Shearman & Sterling is acting as
international legal counsel to Tengzhong on this transaction. Citi is acting as financial advisor to
General Motors Corp. (GM), one of the world's largest automakers, was founded in 1908, and
today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM
employs 235,000 people in every major region of the world, and sells and services vehicles in
some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab,
Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by
China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the
industry leader in vehicle safety, security and information services. More information on GM can
be found at www.gm.com.
Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. ("Tengzhong") is one of China's major
privately owned engineering companies. Tengzhong is a manufacturer of heavy machinery
equipment with a presence in special-use vehicles, road and bridge construction equipment and
construction and energy industry equipment.
Since its establishment, Tengzhong has quickly become a major manufacturer of machinery and
construction components through a series of successful acquisitions. Tengzhong prides itself on
its automated manufacturing equipment, its processing systems, significant research and
development initiatives and commitment to innovation.
This press release contains forward-looking statements. All statements contained in this press
release that are not clearly historical in nature or that necessarily depend on future events are
forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," and similar
expressions are generally intended to identify forward-looking statements. These statements are
based on current expectations, estimates and projections of GM's and Tengzhong's management
and currently available information. They are not guarantees of future performance, and
investors are cautioned that all forward-looking statements involve certain risks and uncertainties
that are difficult to predict and are based upon assumptions as to future events that may not
prove to be accurate. Many factors could cause the actual results, performance or achievements
of GM and Tengzhong to be materially different from those that may be expressed or implied by
such statements, including but not limited to those discussed in GM's Annual Report on Form 10-
K for the year ended December 31, 2008, as amended, and other filings with the SEC. Although
GM and Tengzhong believe the assumptions underlying the forward-looking statements
contained herein are reasonable, there can be no assurance that the forward-looking statements
included in this press release will prove to be accurate.