Suzuki to buy back GM's 3 percent stake for $230 million

TOKYO, Nov 17, 2008 (Kyodo News International - McClatchy-Tribune Information Services via COMTEX) -- SZKMF | Quote | Chart | News | PowerRating -- Suzuki Motor Corp. said Monday it has agreed to buy back General Motors Corp.'s 3.02 percent stake in the Japanese automaker for 22.37 billion yen ($230 million) as the struggling U.S. auto giant is seeking to raise cash.

With the sale, GM, which used to own shares in Isuzu Motors Ltd.

and Fuji Heavy Industries Ltd. in addition to Suzuki, will break all of its capital ties with Japanese automakers.

GM will sell the whole stake, equivalent to 16.41 million shares, on the stock market Tuesday and the Shizuoka Prefecture-based automaker will buy back all of the shares the same day, Suzuki said.

Suzuki's purchase, to be made through the Tokyo Stock Exchange's ToSTNeT-2 system for purchasing treasury stock, will be implemented at 1,363 yen per share, the closing quote for Suzuki stock on the TSE's First Section on Monday, it said.

Suzuki Chairman and Chief Executive Officer Osamu Suzuki said in a press release that the automaker decided to agree to GM's request because "this particular step to sell the shares it owns as a step toward strengthening its balance sheet is very understandable." Suzuki said he agreed in a telephone conversation with GM Chairman Rick Wagoner that the two automakers will continue a range of joint projects they have been implementing.

Suzuki said he and Wagoner confirmed "that all individual initiatives will be pursued as they are today." On Nov. 7, GM said in a statement that it had suffered a net loss of $2,542 million (250 billion yen) in the July-September quarter, attributing the poor performance to the impact of the "unprecedented economic and credit market turmoil." A Suzuki official said that "all individual initiatives" that the automaker's president referred to include joint development of hybrid vehicles and fuel cells as well as development of power trains.

Suzuki and GM have been cooperating under tie-up arrangements entered in 1981.

The Japanese automaker said the planned sale by GM of the Suzuki shares has been approved by the carmakers' respective boards.

Major U.S. automakers including GM and Ford Motor Co. have reported huge net losses, prompting President-elect Barack Obama to pledge to do all he can to turn around the ailing U.S. auto industry.

Obama, in his first media appearance in Chicago since the presidential election, said the auto industry's hardship "goes far beyond individual auto companies to the countless suppliers, small businesses and communities throughout our nation who depend on a vibrant American auto industry." Wagoner said in the Nov. 7 statement, "Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales." U.S. congressional efforts to enact legislation to reinvigorate the automakers will shift to top gear in the coming months, industry watchers said.

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Source: http://www.tradingmarkets.com/.site/news/Stock%20News/2029693/