TRAVERSE CITY, Mich., Aug 7 (Reuters) - General Motors Corp GM.N said on Tuesday it closed a delayed $5.6 billion deal to sell its Allison Transmission unit to a pair of private equity firms, The Carlyle Group and Onex Corp OCX.TO
Closure of the deal was delayed in late July when a debt sale to fund the buyout was postponed because of sharply diminished investor appetite for riskier bonds tied to concerns about weakness in the U.S. mortgage and housing markets.
Allison, which employs about 3,400 workers, makes transmissions for trucks, buses and military vehicles and has annual revenues of over $2 billion.
The Carlyle Group and Onex are splitting the roughly $1.5 billion equity portion of the deal, the firms said. For GM, the sale closure represents a cash infusion at a time when it has been taking steps to improve liquidity because of ongoing talks with its major industrial union, the United Auto Workers.
GM ended the second-quarter with $27.2 billion in cash before closing the Allison sale.
GM said in a quarterly report filed on Tuesday with the Securities and Exchange Commission that it had taken steps to raise liquidity ahead of the Sept. 14 expiration of the UAW’s current contract.
“A lengthy strike by the UAW that involves all or a significant portion of our manufacturing facilities in the United States would have a material adverse effect on our operations and financial condition, particularly our liquidity,” GM said in its report.
GM and the two other Detroit-based automakers -- Ford Motor Co. F.N and newly private Chrysler LLC -- have also considered funding a trust fund aligned with the UAW that would relieve them of liabilities for retiree health care if such a deal can be struck with the union, according to people familiar with the matter.
Analyst attention has focused in part on how GM might finance such a trust fund to eliminate the estimated $54 billion liability it faces for retiree health care.
(Reporting by Kevin Krolicki)
((Editing by Andre Grenon; email: firstname.lastname@example.org +1-313-300-7276)) Keywords: ALLISON GM/
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