GM to sell stake in Suzuki to raise cash

[November 17, 2008]  TOKYO (AP) -- Cash-strapped General Motors Corp. will sell its entire stake in Suzuki Motor Corp. for 22.37 billion yen ($230 million), the automaker's latest move to stay afloat while awaiting a decision on government aid for the industry.

Suzuki said Monday it would buy back the 3.02 percent stake from the American auto giant, which is seeking a $25 billion government lifeline, together with Ford Motor Co. and Chrysler LLC, to weather the deepening economic crisis.

Hit by the worst sales slump in more than 25 years and frozen credit, GM has warned that it might not survive through year's end without the U.S. government's financial support.

Hardline Republican opponents of an auto industry bailout have branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion originally earmarked for a Wall Street rescue.

Suzuki said GM's stake sale was necessary for the ailing American automaker to raise capital, but the Japanese company insisted it would continue a business partnership with GM.

"We fully understand the necessity for GM to raise cash," Suzuki chairman and chief executive Osamu Suzuki said in a statement. He said he was in close contact with GM chief executive Rick Wagoner, and the two companies would keep joint projects, including the development of hybrid vehicles and a joint venture for sports utility vehicles in Canada.

The GM-Suzuki partnership dates to 1981 but those ties loosened after GM sold a 17 percent stake in Suzuki in 2006, leaving it with 3 percent.

GM lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn't get government help.

The automaker plans to lay off about 3,600 workers beginning early next year as it slows production at 10 of its assembly plants.

[Associated Press; By Shino Yuasa]

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