It's not over till the fat lady sings

[HummerMann]

This story was also being reported on CNBC yesterday.......so maybe there's still hope for Perleman at AMGeneral who was rumored in the hunt for Hummer GM?s Hummer Sale May Fail to Clear China?s Regulatory Hurdles
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By Bloomberg News

June 5 (Bloomberg) -- General Motors Corp., seeking to shed unprofitable units after filing for bankruptcy, may have its agreement to sell the Hummer sport-utility vehicle brand blocked by Chinese regulators, threatening 3,000 U.S. jobs.

Sichuan Tengzhong Heavy Industrial Machinery Co.?s bid for Hummer runs counter to China?s attempts to develop a globally competitive auto industry by focusing on fuel-efficient vehicles, according to analysts. The government also wants to pare the nation?s more than 100 automakers to ease competition.

?A new entrant in the car industry is not something they?re looking to see,? said Chip Chaikin, who helps oversee $800 million as managing director of Shanghai-based Blue Point Capital Partners Asia. ?It?s pretty unlikely? the deal will go through.

Tengzhong also needs to persuade at least two Chinese government agencies that it can turn Hummer into a profitable company to get clearance for the deal, said Zhang Xin, an analyst with Guotai Junan Securities in Beijing. Hummer?s U.S. sales are plunging as higher gasoline prices and rising job concerns hammer demand for its gas-guzzling SUVs.

Approval Unlikely

China is unlikely to approve the Hummer deal, state-owned Shanghai Securities News reported yesterday, without saying where it got the information. The government is encouraging companies to buy overseas partsmakers rather than automakers, added the newspaper, which is affiliated with state-controlled Xinhua News Agency.

?There are many uncertainties about the deal and one of them is whether Chinese authorities will approve it,? said Zhang. ?The big issue for Tengzhong is how long it will take to make a profit from the investment.?

Hummer is worth an estimated $500 million, Detroit-based GM has said in bankruptcy documents. The brand is one of four in the U.S. the carmaker wants to offload to exit bankruptcy as a leaner, more profitable company.

GM Chief Financial Officer Ray Young said yesterday that he doesn?t expect regulators to block the deal and that Tengzhong is ?very excited? about it.

?Some people may have views and speculation but the Chinese government has a process that we respect,? said Tim Payne, a spokesman for Chengdu, Sichuan province-based Tengzhong. ?We have only just signed an MOU but as we develop our proposals with GM and Hummer we will continue to work with the appropriate authorities.?

?It is a business decision,? said Chen Rongkai, a media officer at China?s Ministry of Commerce. He declined to comment further.

Commerce Ministry

The commerce ministry vets all overseas investments worth more than $100 million. Smaller deals go through local regulators. The State Administration of Foreign Exchange also looks at all overseas investments by Chinese companies.

GM has won court approval to sell assets as soon as next month after collapsing under $172.8 billion in debt and failing to adapt to consumer demands for cars that use less fuel. Sales of Hummer SUVs, which start at about $31,000 for the H3, fell 51 percent in 2008 and 67 percent this year through April.

GM and Tengzhong, a privately owned maker of special-use vehicles and construction machinery, expect to complete the purchase in the third quarter, pending closing conditions and regulatory approvals, they said in a June 2 statement. AM General Corp. builds Hummer H2s in Indiana for GM. The H3 is built in Shreveport, Louisiana.

SAIC?s Experience

Chinese carmakers haven?t benefited from previous overseas acquisitions. SAIC Motor Corp., China?s biggest domestic automaker, bought control of South Korea?s Ssangyong Motor Co., only to have the unit go into receivership after SUV sales plunged.

Credit Suisse Group AG is acting as financial adviser to Tengzhong on the Hummer deal and Shearman & Sterling is serving as international legal counsel. Citigroup Inc. is acting as financial adviser to Detroit-based GM.

The deal may also stumble if Tengzhong needs to raise funds from Chinese lenders, who have been told by their regulator to enhance risk management.

?The government will step in if Tengzhong wants to fund the deal with loans from domestic banks,? said Yale Zhang, a director at CSM Asia in Shanghai.

Public Offer

Still, the fact that Tengzhong has publicly made an offer may suggest that it can complete it, said Ricon Xia, a Daiwa Institute of Research (H.K.) Ltd. analyst in Shanghai.

?The way the deal has played out so far shows that Tengzhong is no novice in capital markets,? said Xia. ?They may be able to pull it off.?

That would mean overcoming the central government?s push to curb competition in the auto industry, including combining the nation?s 14 largest automakers into 10 by 2011. The move is designed to boost profit margins and help form bigger players able to challenge Toyota Motor Corp. and Volkswagen AG worldwide. Tengzhong doesn?t make SUVs or passenger cars.

China is also encouraging automakers to build more fuel- efficient cars, including hybrids, to help win sales overseas and to reduce oil imports and pollution at home. The 3.7-liter Hummer H3T gets 14 miles to the gallon in city driving, according to the U.S. Environmental Protection Agency.

?If I were a betting man, I?d bet this wouldn?t going to happen,? said Chaikin. Still, ?crazier things have occurred.?

[Intercooled]

The never ending drama! I believe both governments want SUV's to fail and will push for thier failure. We are slowly turning into Americoms. No matter how good the technology can be to increase fuel efficiency in SUV's there will be a push towards little egg cars.

[HummerJim]

Went to St. Louis yesterday to get some labs done and stopped by Lynch on my way in. They are saying the same thing, that Hummer will be sold, but the "memorandum" with the Chinese is far from a done deal.

[Intercooled]

I kinda hope the Chicoms dont get it. I'd like for everything to stay here. Wonder who the other bidders were.

[fcfanatic]

LOL they constantly contradict themselves

I'm going to stick with my BMW cars for now. will sell the X5 when the time is right

[HUMMERcustoms.com/TAZ]

The Chinese co. will not build the Hummers. Everything will still be built in USA. If non USA co. buys the labor will have to renegotiate which is the area it plans to make Hummer profitable and work on lowering the price of the rides to consumers. They will also go with, as I mentioned in another thread, a very stripped down model for sell to 3rd world companies or basicly in markets that really need Hummers like HX to really use to work them everyday in tough terrain. I too wish and hope AM General could buy the brand. I'm sure they are trying to figure a way to do it since they will begin to have H1 sells to Gov. drop because gov. has had better patrol rides developed due to IED's.
AM General will most likely need a new income stream other than just trying to build H1's for public purchase again.

The chinese company from the info I can get off radar is floating in excess cash to invest and they love as well respect the prestige of Hummer any model. These guys have not developed the rep. of selling highly prized heavy equip. built with quality and price to compete or beat any company. They stand behind the products as well. They will not buy Hummer to run it into the ground. I have heard that there could be a chance that AM General may be asked by Chinese to take a % of new company so there will be management to look after the investment before ink dries on signed agreements. This move would be the smartest move that they could make since it would lend a greater air of legit having AM General involved.

Well I have my 05 with second row OEM captains (not cheap aftermarket do not match front seats), upgraded electronics even more than 2010's, and many other things thought about, built by Us, and installed running before Hummer ever got to it. So I will not be buying new soon when we can buy and convert older H2's low miles for less the buying new. But, really we just like to make them look and perform the way we like so no worries about warranty.

I just hope Hummers keep being built somehow.

TAZ

[johndjmix1]

If Hummer is only worth 500 Million (As stated above), im really surprised there arent alot more bidders.

Not that I have 500 mil, but man think about it. The whole Hummer brand is the cost of of two new 747 jets.

Seems a bit low???

--John

[zacknolden]

Originally Posted by HummerMann

This story was also being reported on CNBC yesterday.......so maybe there's still hope for Perleman at AMGeneral who was rumored in the hunt for Hummer GM?s Hummer Sale May Fail to Clear China?s Regulatory Hurdles
Share | Email | Print | A A A

By Bloomberg News

June 5 (Bloomberg) -- General Motors Corp., seeking to shed unprofitable units after filing for bankruptcy, may have its agreement to sell the Hummer sport-utility vehicle brand blocked by Chinese regulators, threatening 3,000 U.S. jobs.

Sichuan Tengzhong Heavy Industrial Machinery Co.?s bid for Hummer runs counter to China?s attempts to develop a globally competitive auto industry by focusing on fuel-efficient vehicles, according to analysts. The government also wants to pare the nation?s more than 100 automakers to ease competition.

?A new entrant in the car industry is not something they?re looking to see,? said Chip Chaikin, who helps oversee $800 million as managing director of Shanghai-based Blue Point Capital Partners Asia. ?It?s pretty unlikely? the deal will go through.

Tengzhong also needs to persuade at least two Chinese government agencies that it can turn Hummer into a profitable company to get clearance for the deal, said Zhang Xin, an analyst with Guotai Junan Securities in Beijing. Hummer?s U.S. sales are plunging as higher gasoline prices and rising job concerns hammer demand for its gas-guzzling SUVs.

?If I were a betting man, I?d bet this wouldn?t going to happen,? said Chaikin. Still, ?crazier things have occurred.?

I am still hoping that the legendary Hummer can have it's nest at the right bidders. I don't want the brand to be corrupted.

[johndjmix1]

How the hell could they sell the whole brand for 500 mil. Theres got to be a mistake in that number, way too low.

--John