GM to distribute marketing materials in hopes of selling Hummer brand, French plant

General Motors Corp. intends to distribute marketing materials to potential buyers of its Hummer brand and a French manufacturing plant in October. That’s part of a strategy to accelerate the $15-billion cost-cutting and fund-raising plan it announced in July, GM Treasurer Walter Borst said today in a presentation to analysts.

Speaking at the Deutsche Bank Leveraged Finance Conference, which was webcast, Borst said GM is progressing on a fast pace in the cash-generating plan it announced July 15 and has hired “additional outside resources to help us meet or exceed these targets.”

Borst said GM hopes to raise between $2 billion and $4 billion in cash through asset sales but is considering the sale of assets “significantly in excess of this amount.”

“I would anticipate additional announcements for you here in the fourth quarter,” Borst said. “We believe we can monetize certain assets without impacting the strategic direction of the company.”

GM and other automakers have faced liquidity problems as losses have mounted and U.S. sales have declined. GM announced a plan in July to cut $10 billion in costs and raise another $5 billion through asset sales and borrowing through the end of next year.

Borst said that GM expects the global market to grow from 70.6 million in sales last year to more than 75 million in 2010, and says GM is positioned to capture that growth in emerging markets. The growth, coupled with cost cuts, factory capacity reductions and other management decisions, will set the stage for improved financial results by 2010, he said.

By 2010, GM will sell two-thirds of its vehicles outside the U.S., compared with 59 percent in 2007, he said.

GM issued what it refers to as its liquidity plan on July 15 to quiet Wall Street concerns that the company may not have enough cash to sustain itself until 2010. While the plan initially quelled that concern, more recent mayhem in financial markets again has the automaker confronting worries that it doesn’t have enough cash to make it through the current downturn and may now have more trouble raising the funds in the troubled credit markets.

Borst said the automaker remains on track and believes it will meet or exceed its targets.

GM has already eliminated $1.5 billion in operating costs this year and believes it is on track to cut an additional $8.5 billion next year through actions such as plant capacity adjustments, eliminating health care for employees 65 and older, thinning the ranks of its salaried workers through a retirement incentive program, selling off inventory and freezing spending on its large-truck programs.

In July, GM said it also planned to raise between $2 billion and $3 billion by borrowing against foreign subsidiaries, brands, real estate or its remaining 49% stake in financial company GMAC. Borst said GM continues to take advantage of its options as they become available. Still, analysts said GM’s decision to draw down the remaining $3.5 billion from a $4.5 billion line of credit last Friday raised anew concerns that GM’s funding options are limited.

“Given the uncertainty facing U.S. financial institutions at present, we think securing the additional liquidity is understandable,” Goldman Sachs auto analyst Patrick Archambault wrote in a note to investors. “However, we see the liquidity draw as a net negative, as it suggests that GM itself sees limited funding options in the near future.”

Borst said the automaker is confident that its actions are preparing itself to participate when the market rebounds and is simply accessing capital to secure itself in the face of uncertain financial markets.

“We have some significant expenditures over the next few months,” he said. “With all the uncertainty in the capital markets and the credit markets, it just seemed like a good time to take the money in-house and make sure it was available to us if and when we need it.”

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