REFILE-UPDATE 4-GM strikes Hummer deal with China's Tengzhong

(Refiles to fix Tengzhong website link in paragraph 10)

* China's Sichuan Tengzhong Heavy Industrial is buyer

* Hummer deal comes a day after GM bankruptcy filing

* US consumer tastes eventually soured on macho brand
(Recasts with confirmation of buyer's name, adds background on
Sichuan Tengzhong, adds NEW YORK to dateline)

By Poornima Gupta and Jui Chakravorty

DETROIT/NEW YORK, June 2 (Reuters) - General Motors Corp
GMGMQ.PK said on Tuesday it reached a tentative deal to sell
its Hummer brand to a privately held Chinese company, part of an
effort to drop four unprofitable vehicle lines and leave
bankruptcy as a leaner company.

GM, a day after filing for bankruptcy, said in a statement
that it reached a memorandum of understanding with Sichuan
Tengzhong Heavy Industrial Machinery Co for the sale. Tengzhong
said it will retain Hummer's senior management and operational
team.

GM said Tengzhong will also enter into a long-term contract
assembly and key component and material supply agreement with
GM.

Under the deal, which is subject to regulatory review and is
expected to close in the third quarter, Tengzhong will assume
Hummer's existing dealer agreements.

Financial terms were still under discussion and will not be
disclosed, GM said. Bankers have said Hummer could fetch about
$100 million in cash in addition to other commitments.

The deal marks the first time that a Chinese buyer has
acquired a brand from one of the struggling U.S. automakers.

Chinese parts suppliers and automakers have shopped for U.S.
automotive assets, including those at also-bankrupt Chrysler
LLC, but no deals have been completed despite the enormous
pressure on U.S. automakers in recent years to cut costs.

Based in the Chinese province of Sichuan, Tengzhong makes
special-use vehicles, highway and bridge structural components,
construction machinery, and energy facilities.

Tengzhong will expand into the premium off-road vehicle
segment, according to the joint statement from it and GM.

Tengzhong's website
(here) did
not indicate whether the company has experience running plants
overseas or of producing passenger vehicles of any kind.

GM said earlier on Tuesday that the buyer of Hummer, whom it
did not initially identify, would contract to build the H3 model
SUV and the H3T pickup truck at GM's plant in Shreveport,
Louisiana, through at least 2010.

In addition, GM said the investor would fund future vehicles
for Hummer and invest in alternatives to the heavy gas-guzzling
engines that are the hallmark of the brand.

In Shreveport, where 800 workers work on a single shift
building Hummer H3 and H3T models, there was relief that a new
buyer would keep the line running for at least a while longer.

"We're just excited that Hummer may live on," said Morgan
Johnson, president of UAW Local 2166, which represents workers
at the GM plant.

DIMINISHED EXPECTATIONS

GM had expected Hummer to fetch more than $500 million when
it went up for sale in June 2008.

The automaker said in a court filing on Monday that the sale
could not proceed on "reasonable terms" due to tight credit and
concerns about GM's financial condition.

Part of the problem has been that the military-derived
Hummer has become an emblem of excess, turning consumer tastes
against the brand's macho styling and prices that can top
$71,000.

U.S. sales were off by more than two-thirds during the first
four months of the year.

First seen as multipurpose, off-road military vehicles,
Hummers were originally built by AM General. Its first model was
the Humvee, built for the military. GM bought the Hummer brand
from AM General in 1999. AM General still makes the Humvee for
the U.S. military.

After losing $88 billion since 2005, GM is in the process
of cutting debt, workers and brands in bankruptcy.

It is seeking to sell its Saab and Saturn brands by the end
of 2009 and plans to discontinue Pontiac by the end of 2010.

That would leave a smaller GM to be rebuilt around the
Chevrolet, Cadillac, GMC and Buick brands. Together those
account for more than 80 percent of current sales.

Credit Suisse is acting as exclusive financial adviser and
Shearman & Sterling is international legal counsel to Tengzhong
on the transaction. Citi is financial adviser to GM.
(Additional reporting by Kevin Krolicki and Chris Kaufman;
Editing by Gerald E. McCormick, Patrick Fitzgibbons and Matthew
Lewis)