DETROIT / SICHUAN (BNO NEWS) – General Motors on Friday announced it has signed a definitive agreement to sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd, a Chinese company.

Under the terms of the definitive agreement, the companies said, Tengzhong will acquire the ownership of the Hummer brand, trademark and trade names, as well as specific IP license rights necessary for the manufacture of Hummer vehicles. The buyer will also assumer the existing dealer agreements relating to Hummer’s dealership network.

The deal to acquire Hummer will be made through an investment entity, in which Tengzhong will hold an 80 percent stake. Mr. Suolang Duoji, who is a private entrepreneur with holdings that include the Hong Kong-listed thenardite producer Lumena, will hold the remaining 20 percent stake. Precise financial terms of the agreement were not disclosed.

The transaction is subject to customary closing conditions and regulatory approvals and/or review by government agencies in the U.S. and China. The completion of the definitive agreement enables the companies to continue and further the overall regulatory review process.

“HUMMER is a strong global niche brand and this agreement signifies another important milestone in writing the next chapter for both GM and HUMMER,” said Fritz Henderson, GM President and CEO. “For HUMMER, the combination of its knowledgeable leadership team, vehicle design expertise and the capital financing of Tengzhong portend a successful future.”

Under the agreement, Hummer would contract vehicles manufacturing, key components and business services from GM during a defined transitional time period. Two GM assembly plants, in Shreveport and Mishawaka, will continue to produce vehicles until June 2011, with an option one year extension until June 2012 if requested. GM said the deal is expected to secure more than 3,000 jobs in the United States related to the sale and manufacturing of Hummer vehicles.

Hummer will continue to be managed by members of its existing leadership team including James Taylor, who will remain in his current role as Hummer’s chief executive officer. “We are fortunate to have a partner who understands and recognizes the importance of continuing investment in Hummer’s heritage as a U.S.-based and branded company with a view toward capitalizing on global opportunities,” said Taylor. “Backed by a privately owned and well-capitalized company, we are going to be able to focus on providing customers with more efficient models that deliver Hummer’s promise of authentic, purpose-built design and engineering.”

Once the transaction is complete, Hummer will become the first automaker to offer an alternative fuel powertrain in every model, with the addition of E85 FlexFuel capability in the 2010 H3 and H3T. Hummer is also in the process of obtaining emissions certification for a diesel H3 that will be introduced in markets outside of North America. The brand’s future product development will focus on improving efficiency and performance in current Hummer models with alternative fuel powertrains, more efficient gas engines, 6-speed transmissions and diesel engines.

“This transaction marks an exciting step for both Tengzhong and Hummer, as we invest in a business that has significant opportunity in the U.S. and around the globe,” said Yang Yi, chief executive officer of Tengzhong. “We are excited about some of the initiatives already underway at Hummer that we believe our investment will be able to accelerate, particularly related to the creation of the next generation of more fuel-efficient vehicles to meet not only future regulations but also customer expectations.”

Credit Suisse is acting as exclusive financial advisor and Shearman & Sterling is acting as international legal counsel to Tengzhong on this transaction. Citi is acting as financial advisor to GM.