FAQ's Q1 What are the details of the announcement? Sichuan Tengzhong and GM have entered into a definitive agreement that will allow Tengzhong to acquire GM’s premium all-terrain HUMMER brand. Tengzhong’s investment in HUMMER will provide the capital necessary to grow the HUMMER brand under HUMMER’s current leadership and operational team. This announcement is great news for HUMMER’s current and future customers, dealers, suppliers and employees around the globe. Q2 What are the terms of the transaction? Under the terms of the definitive agreement, the buyer will acquire ownership of the HUMMER brand, trademark and tradenames, as well as specific IP license rights necessary for the manufacture of HUMMER vehicles. Tengzhong will also assume the existing dealer agreements relating to HUMMER’s dealership network. The deal is expected to secure more than 3,000 U.S. jobs related to the manufacture and sale of HUMMER vehicles. Under the agreement, GM’s Shreveport assembly plant would continue to contract assemble the H3 and H3T and AM General’s Mishawaka assembly plant will continue to assemble the H2. Both facilities will produce the specified vehicles until June 2011, with an optional one year extension until June 2012. Financial terms of the agreement were not disclosed. Q3 Why is Tengzhong buying HUMMER? HUMMER has always been a profitable niche all-terrain vehicle brand and with the proper investment in new, more efficient products, continued expansion into emerging markets and the right management, it has the potential to yield significant returns on investment over the long run. Tengzhong has high confidence in the HUMMER team and its products and will provide the resources for further access and global expansion of the HUMMER business, including in emerging markets and China, to increase the global footprint and profitability of HUMMER. Q4 Who is Tengzhong? Tengzhong is a privately owned Chinese industrial machinery group and domestic manufacturer of road, construction and energy industry equipment. The investment entity buying HUMMER will be jointly owned by Tengzhong and private entrepreneur Suolang Duoji. Tengzhong will hold 80 percent of the entity and Mr. Suolang 20 percent. Tengzhong’s investment in HUMMER will provide the capital necessary to grow the HUMMER brand under HUMMER’s current leadership and operational team. Q5 When is the transaction expected to close? The transaction is expected to close in late 2009 or early 2010. Q6 What does this mean for HUMMER's suppliers, dealers and employees? This transaction is great news for HUMMER's current and future customers, dealers, suppliers and employees around the globe. Tengzhong intends to keep the HUMMER operations largely intact, including the current suppliers, dealer networks, and HUMMER’s current leadership and operational team. The transaction is expected to secure more than 3,000 U.S. jobs. Under the agreement, GM’s Shreveport assembly plant would continue to contract assemble the H3 and H3T and AM General’s Mishawaka assembly plant will continue to assemble the H2. Both facilities will produce the specified vehicles until June 2011, with an optional one year extension until June 2012. In addition, Tengzhong will assume the existing dealership agreements relating to HUMMER’s dealership network. Q7 Will you be closing any plants that currently manufacture HUMMER vehicles? As we have previously stated, at least through a transitional period for the next few years, HUMMER will continue to rely on its current manufacturing capabilities at GM’s Shreveport Assembly facility in Louisiana and at AM General’s Mishawaka, Indiana facility. HUMMER and Tengzhong are actively engaged in evaluating a long-term U.S. manufacturing solution. Q8 Will you move manufacturing capacity to China from the U.S.? Current manufacturing capacity will remain in the U.S. In addition to the contract vehicle agreements with GM, HUMMER and Tengzhong are actively engaged in evaluating a long-term U.S. manufacturing solution. In addition, HUMMER and Tengzhong are currently evaluating plans to establish an additional long-term manufacturing facility in China which will be dedicated to Chinese customers. We believe there is a strong market potential for HUMMER in China. Q9 What is the new strategy for the HUMMER brand under Tengzhong's ownership?
HUMMER is an extremely strong global brand with a loyal and enthusiastic customer base. HUMMER models are currently sold in 38 countries, so its distribution network is well positioned to support the potential growth that will come from the dedicated marketing effort it will launch as a private, stand-alone business. Through the capital provided by Tengzhong, HUMMER has significant opportunity to expand into important new markets, such as China, where demand for SUV’s and off-road vehicles is growing. Investment in HUMMER will help achieve growth and provide the necessary resources and capital to accelerate some important product development initiatives underway, specifically new more fuel-efficient vehicles like the HX Concept that will meet future global and environmental standards and address customers’ needs and demands. Q10 Does this transaction include the sale of HUMMER military technology? No. This transaction does not involve the transfer of any technology used in the production of HUMMER or Humvees for the U.S. military. Q11 What will be the warranty terms for existing and future HUMMER customers? Customers can rest assured that their HUMMER warranty will be honored. Q12 What service arrangements will be put in place for customers? Customers will continue to enjoy existing services offered by HUMMER. GM will work with the new HUMMER entity to ensure a smooth transition following the consummation of the transaction. Tengzhong is committed to ensuring that new and existing HUMMER customers will continue to enjoy the superior product and services for which the HUMMER brand is known. Q13 What will you be doing to increase HUMMER's fuel efficiency? Fuel efficiency is an issue HUMMER has been very focused on for some time. HUMMER’s most popular global model, the H3, currently delivers fuel economy similar to other vehicles in its class and we continue to strive to a higher standard of fuel efficiency. In 2008, HUMMER made a commitment to offer an alternative fuel powertrain in every model by 2010 and in 2008 began producing the H2 with an E85 FlexFuel powertrain. Later this year, the H3 and H3T V8 will also feature an E85 FlexFuel powertrain. In addition, HUMMER is currently conducting the final certification testing on a small displacement diesel engine for the H3 that will be available in the very near future. HUMMER will continue to develop new, smaller, more efficient, yet highly capable off-road vehicles and is currently studying the possibility of a gas-electric hybrid. Vehicles like the fuelefficient HX Concept provide a good direction for the future of the brand. Q14 What sort of regulatory approvals are required to complete the deal? The closing of the transaction is subject to customary closing conditions and regulatory approvals and/or review by agencies in China and the U.S. Tengzhong has started communicating with the relevant regulatory bodies and will continue to support the application process in accordance with the requirements. Formal engagement was only able to begin with the signing of the definitive agreement. The transaction is expected to close in late 2009 or early 2010, which is the point that we also expect to have received the necessary review/approvals to close the transaction. |
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