. General Motors to Sell Equity Stake in
Isuzu Motors Ltd.
Will maintain strong
strategic alliance
DETROIT - General
Motors Corp. announced it would sell its 7.9 percent equity
stake in Isuzu Motors Ltd. The commercial partnership between
GM and Isuzu will continue.
The Isuzu shares
held by GM will be sold to Isuzu's strategic business partners
and major shareholders, Mitsubishi Corp., Itochu Corp. and
Mizuho Corporate Bank.
GM currently holds
a total of 90.09 million Isuzu shares. Based on a selling price
of JPY 397 per share, GM expects to realize cash proceeds of about
USD $300 million, which will be used to support the North American
turnaround plan, finance future growth initiatives, strengthen the
balance sheet and fund other corporate priorities.
"GM's 35-year relationship
with Isuzu has been strong, and we look forward to our continued
partnership," said Rick Wagoner, GM chairman and chief executive
officer. "We will maintain our strategic relationships with Isuzu
in the many different areas of cooperation we have established over
the years. At the same time, GM will take another step to enhance
our liquidity position."
GM has held an equity
stake in Isuzu since 1971, when it purchased approximately 34 percent
of the Isuzu shares outstanding. Between 1971 and 1998, GM increased
its stake to 49 percent from 34 percent. In 2002 as part of the
Isuzu restructuring, GM cancelled shares related to its 49 percent
stake and invested fresh capital of $500 million primarily for the
purchase of certain strategic commercial assets and for a new equity
stake of 12 percent in Isuzu. Between 2002 and 2005 GM's stake in
Isuzu was diluted from 12 percent to the current 7.9 percent, due
to conversion of Isuzu's convertible bonds.
Over the last 35 years, the
companies have been involved in various joint projects in product development,
advanced technology, global purchasing and supply chain management, and
product distribution. Among the successful collaborations that will continue
are the following:
Midsize pickup truck assembly
and distribution in Asia Pacific, Latin America, Africa, and the Middle
East
Development and manufacturing
of diesel engines for passenger cars in Europe
Development and manufacturing
of diesel engines for full-size pickups in the United States
Commercial vehicle design,
engineering and manufacturing
The sale of GM's equity stake
in Isuzu, including cash proceeds received and any potential gain on sale,
will be recorded in the second quarter. GM expects a pre-tax gain on the
sale of approximately $300 million from this transaction as GM's book base
was written-down to zero in 2002.
