Providing new details on the proposed deal, these people said that the biggest obstacle to emerge in the last few days was not regulatory approval, as suggested by the Chinese media, but bank financing. While people in the auto industry have known for several weeks of regulators’ reluctance to endorse the deal, the bank difficulties have only surfaced in recent days.
Regulators have informally agreed not to object if Tengzhong makes the purchase through an offshore subsidiary, said another person knowledgeable about the transaction.
But if an offshore subsidiary is used, Hummer would not qualify under Chinese regulations as a Chinese company after the deal. It would not be able to shift production to China any time soon because China only allows foreign automakers to set up 50-50 joint ventures with Chinese car companies, and each of these deals also requires individual approval from regulators.
While Tengzhong has the cash to pay for the Hummer brand, it needs bank financing to operate the division, redesign vehicles and set up new production facilities.
If we do, please may I have a shinny new car in the deal.................