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Dire Measures: GM to Sell Suzuki Stake to Raise Cash
Added: (Wed Nov 19 2008)
Even as the US Congress debates over a $25 billion loan program for Detroit’s embattled “Big Three” automakers, General Motors (GM) announced plans to sell its entire stake in Japanese automaker Suzuki for $230 million to raise funds. Suzuki said on Monday that it will buy back the 3.02 percent stake from the America automaker while continuing to cooperate on a number of joint projects with GM.
"We understand full well that GM faces a need to sell its shareholdings to secure funding," Suzuki said. Suzuki’s chief executive, Osamu Suzuki added that the two companies would continue to collaborate on joint projects, including the development of hybrid vehicles and a joint venture for sport utility vehicles in Canada.
The GM - Suzuki partnership started in 1981. However, the US carmaker sold a 17% stake in Suzuki in 2006 and is now on the verge of exiting entirely.
In the past months, the GM has slashed jobs, reduced work shifts, shut down factories in Canada and US in its attempts to reduce costs and become leaner even as the sales of vehicles fell to their worst in 25 years. GM reported a net loss of $2.5bn in the third quarter of 2008.
While Democrats pledged on Sunday to try to get Detroit a slice of the $700 billion bank- rescue package, beleaguered US automakers are scrambling for alternate means to raise cash to make it through the year.