Tengzhong plans offshore agency for Hummer bid

Shanghai, July 22 (Gasgoo.com) China's Tengzhong, the surprise leading bidder for the General Motors' Hummer brand, is likely to establish an offshore investment vehicle (= agency) to facilitate its purchase, Reuters reported today, citing a company official.

Sichuan Tengzhong Heavy Industrial Machinery, a little-known machinery manufacturer based in southwest China, began seeking the regulatory approval last week by submitting documents to the country's National Development and Reform Commission. China's commerce ministry has been supportive of this deal "as a way for a Chinese company to go global."

"Tengzhong is looking at an offshore vehicle specifically set up to purchase Hummer," a company official said today. Tengzhong would be the majority stake holder in the special purpose vehicle (SPV), while Li Yan (aka Suolang Duo Ji), who is the chairman of China's chemical maker Lumena Resources Corp, and others would take minority stakes.

Tengzhong expects the deal to be completed in the third quarter this year, which is reportedly priced at $200 million at most, less than half of the $500 million sought by GM last year. Tengzhong will start to establish an SPV after the deal is secured.

"Li Yan is very keen to participate," said the official. Lumena Resources, which shares the same home base with Tengzhong in Sichuan province, had said earlier that its chairman and not the company itself was interested in the Hummer deal.