GM, Isuzu Finalize Agreements

NEW YORK -October 25, 2002; Dow Jones is reporting that General Motors Corp. finalized details on its agreements with Isuzu Motors Ltd. relating to Isuzu's previously announced three-year business plan.

In a press release early Friday, Isuzu also said it had reached agreement on a broad financial restructuring with its banks.

GM, Isuzu and the banks expect to finalize all transactions by the end of the year.

In August, General Motors engineered a financial restructuring for affiliate Isuzu Motors under which the U.S. auto powerhouse will make a fresh investment of 60 billion yen, or $504.7 million, in Isuzu, and the Japanese truck maker's biggest lenders will swap 100 billion yen in loans to Isuzu for new shares, reducing the company's crushing debt load.

As part of the deal, GM will pay 50 billion yen to acquire two of Isuzu's most-prized assets, its U.S. and Polish diesel-engine operations, as well as the rights to the other Isuzu diesel engines and technologies GM uses.

GM, which wrote down its 49% stake in Isuzu to zero in the second quarter of last year, will have its existing equity in the company retired and will spend 10 billion yen to buy a 12% share of the restructured Isuzu.

Isuzu also reached preliminary agreements with its banks on a broad financial restructuring in which Isuzu will rationalize under-performing operations, reduce overall employment levels and restructure its sport utility vehicle business in North America.

Earlier Friday, Isuzu slashed its earnings estimates for the fiscal year ending March 31 due to one-time restructuring costs and said it will withdraw from its car-making joint venture with Fuji Heavy Industries Ltd. in the U.S., and from its recreational vehicle business in Japan.

The implementation of Isuzu's restructuring plan is dependent upon receiving approval from the company's stockholders and finalization of documents.