GM's Hummer Brand Is Said to Attract Chinese Company, Private-Equity Firm

[Spuds]

Feb. 12 (Bloomberg) -- General Motors Corp., planning asset sales to keep $13.4 billion in U.S. loans, has attracted interest in its Hummer brand of light trucks from a Chinese company and a private-equity firm, people familiar with the talks said.

The pace of negotiations has intensified in the past few weeks, said the people, who wouldn?t name the suitors and asked not to be identified because the discussions are private. More meetings are scheduled this week, one person said.

?The Hummer review is progressing and an update is due by the end of the first quarter,? said GM spokeswoman Joanne Krell, who wouldn?t comment on any bidders.

Unloading the sport-utility vehicle unit would move GM closer to the goal of showing its future viability to the U.S. Treasury by Feb. 17. If the biggest U.S. automaker can?t prove its ability to return to profit, it could be told to give up the loans or use the cash for a government-funded bankruptcy.

?Given the volume of the brand and the economic situation, I don?t really see a tremendous value,? said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. He estimated Hummer might fetch $100 million or less.

GM fell 12 cents, or 4.4 percent, to $2.62 at 10:43 a.m. in New York Stock Exchange composite trading. The stock has tumbled 90 percent in the last 12 months.

GM?s 8.375 percent bonds due in July 2033 rose 0.98 cent to 13.98 cents on the dollar, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority. The yield was 59.6 percent.

Union, Bondholders

GM is working to win cost savings from the United Auto Workers and get bondholders to whittle $27.5 billion in debt to $9.2 billion in exchange for equity as part of its survival plan.

Besides considering options for its Saturn unit, GM has put a French factory, the ACDelco parts unit and the Saab brand up for sale and hired Bank of America Corp. and Citigroup Inc. to help with the disposals. GM is asking Sweden to guarantee $600 million in European Investment Bank loans to keep Saab operating, a person familiar with the matter said.

GM had sought to raise $4 billion by shedding assets, a goal that the automaker said in December had been hampered by the September bankruptcy of Lehman Brothers Holdings Inc., which deepened the global credit crunch.

Shift to Cars

Chief Executive Officer Rick Wagoner said GM was considering options for Hummer, including a sale, at the June 3 annual meeting as record fuel prices prompted the automaker to shift its focus to more fuel-efficient cars away from light trucks.

GM bought the license for the Hummer brand from AM General in 1999 and started selling the $140,000 H1, the five-ton SUV patterned after the all-terrain military vehicle popularized by actor Arnold Schwarzenegger, now California?s governor.

While the H1 never sold more than 875 units a year, it won enough of a following for GM to add the 8,600-pound (3,900- kilogram) H2 in 2002. The 4,700-pound H3 followed in 2005. GM also started building the H3 in South Africa in 2006 for sales in Europe, the Middle East and Africa.

Rising gasoline prices eventually eroded demand. GM halted production of the H1, which like the H2 was too heavy to come under U.S. fuel-economy standards, in 2006 as sales dwindled.

Hummer?s U.S. deliveries peaked at 71,524 that year, according to Autodata Corp. U.S. sales of the SUVs, which start at about $31,000 for the H3, fell 51 percent in 2008.

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