TOKYO, Oct. 25 /PRNewswire/-- General Motors (NYSE: GM) confirmed today
that it had finalized details on agreements with Isuzu Motors Ltd. relating to
Isuzu's previously announced three-year business plan.
In addition to the GM agreements, Isuzu announced that it had reached
agreement on broad financial restructuring with its banks including Mizuho
GM, Isuzu and the banks expect to finalize all transactions by
The principal components of the Isuzu restructuring package include the
As announced in August, GM will acquire majority ownership of two Isuzu
engine subsidiaries and other specific assets strategic to GM for about Y50
billion (U.S.$420 million). GM will nominate a senior executive as
co-representative director and executive vice president of Isuzu to support
Isuzu management. Isuzu will retire GM's existing equity in Isuzu Motors, and
GM will purchase new equity for about Y10 billion (U.S.$80 million),
representing a 12-percent ownership stake.
Isuzu also reached preliminary agreements with its banks on a broad
financial restructuring. This includes: a debt-to-equity swap in which Y100
billion (U.S$833 million) of Isuzu debt would convert to preferred equity; new
funding from lenders sufficient to execute the operational plan; and the
rollover of certain of Isuzu's current debt.
A comprehensive operational restructuring under which Isuzu will
rationalize under-performing operations, reduce overall employment levels and
restructure its sport utility vehicle business in North America.
General Motors participation
Under the restructuring proposal, GM will spend a total of Y60 billion
(U.S.$500 million). Of this total expenditure, about Y50 billion (U.S.$420
million) will be used to acquire a majority interest in certain of Isuzu's
diesel engine businesses and complete ownership of Duramax, Circle L 1.7-liter
and V-6 diesel engine technologies. This includes an acquisition of a
60-percent interest in Isuzu Motors Polska Sp. Z.O.O (Ispol), Isuzu's
small-displacement diesel engine business based in Poland, and an increase in
GM's equity investment in the U.S.-based DMAX Ltd. heavy-duty diesel engine
business from 40 to 60 percent. GM also will acquire a majority interest in a
new diesel engine engineering joint venture with Isuzu as well as rights to
use various related technologies.
GM, which wrote down the value of its 49 percent investment in Isuzu to
zero in the second quarter of 2001, will have its existing equity in the
company retired as part of Isuzu's financial restructuring plan. GM will then
purchase about Y10 billion (U.S.$80 million) of new equity in the company,
leaving GM with a 12-percent ownership stake in Isuzu Motors.
Finally, GM and Isuzu have agreed to name Basil N. Drossos,
Co-Representative Director and Executive Vice President in charge of Finance,
Corporate Planning and Human Resources. Drossos, currently GM AP Vice
President of Vehicle Sales, Service and Marketing and with responsibilities
for GM in India, brings extensive experience and knowledge of Isuzu to his new
assignment, both through his current position and through his years in senior
management with GM's Latin American operations. Drossos will support Isuzu
President Yoshinori Ida in assuring the successful implementation of Isuzu's
new three-year business plan.
The implementation of the Isuzu restructuring plan is dependent upon
receiving approval from Isuzu's stockholders and finalization of documents.
SOURCE General Motors Corporation
-0- 10/25/2002 P
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/Web site: http://media.gm.com
CO: General Motors Corporation; Isuzu Motors Ltd.
-0- Oct/25/2002 7:30 GMT
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