Friday, September 26, 2008

GM Looks To Sell Plant In France, Other Assets

DETROIT (Reuters) - General Motors Corp (GM.N: Quote) is looking to sell a plant Strasbourg, France, and will begin seeking buyers next month when it also kicks off the sale for its Hummer SUV brand, the automaker said on Wednesday.

GM Treasurer Walter Borst detailed the plans in materials prepared for a presentation at a banking conference sponsored by Deutsche Bank AG that were posted on the automaker's website.

GM had already detailed plans for the sale of Hummer, but the presentation marked the first time it identified the Strasbourg plant as one of the other assets it wants to sell as part of a plan to raise up to $4 billion by next year.

"Assets under review are significantly in excess of these amounts," Borst said. "GM believes it can monetize these assets without impacting the strategic direction of the company."

Borst said GM expected to make further announcements about its asset sales program in the fourth quarter.

In his presentation, Borst also said GM was working with GMAC to develop subsidies that would reduce the strain on GMAC's balance sheet from auto financing, "while allowing GM to remain competitive in the marketplace."

GM retains 49 percent of GMAC. Cerberus Capital Management owns the remainder of the finance company.

Borst said GM saw a "risk of recession in Western Europe," with auto sales there expected to be about 1 million vehicles down from 2007 levels.

The decline has been steeper and longer-running in the United States, the world's largest market by volume and GM's home region.

GM expects 2008 U.S. sales to be in the "mid-14 million" unit range, including some medium-duty trucks. U.S. light vehicle sales were 16.15 million a year earlier.

Year-to-date, U.S. light vehicle sales are running near 14.3 million and GM assumed the market could drop as low as 14 million when it compiled a $15 billion plan in July to cut costs and raise cash.

"We need to monitor (the) impact of uncertain credit markets," Borst said in the presentation.

GM expects to cut a total of $650 million by reducing the cost of salaried employees and cutting working capital allocations, Borst said. The latter will include cutting finished product inventory by half, he added.

GM has hired an outside consultant to find other ways to cut back on the cash tied up in its plants, Borst said.

By the end of 2009, GM expects to have cut $10 billion from its cash spending, with 15 percent of the reductions completed by the end of this year and the remainder coming next year.

GM said last week it would draw down the $3.5 billion remaining on a secured credit facility. Borst said that would bolster liquidity "at a time when capital markets have become more challenging."

(Reporting by Kevin Krolicki; Editing by Maureen Bavdek and Andre Grenon)

Source: Reuters.Com

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