General Motors Corp. , which agreed to sell its stake in Japan's Fuji Heavy Industries , on Wednesday said it will restate its second-quarter results to reflect a $700 million to $800 million reduction in the carrying value of its holdings in the company.
The automaker's Fuji Heavy holdings had been valued at $1.5 billion, GM said in a Securities and Exchange Commission filing, adding that the adjustment will not change the amounts shown on the cash flow statement.
The world's largest automaker, which lost $2.5 billion in North America in the first half of 2005, posted a second-quarter net loss of $286 million, or 51 cents per share.
GM said on Wednesday that Toyota Motor Corp. would buy 68 million, or 8.7 percent, of its Fuji Heavy shares for $309 million in cash. GM owns 20 percent of Fuji Heavy, which makes Subaru brand cars and trucks.
GM will divest its remaining 11.4 percent stake in Fuji Heavy by offering the shares into its partner's open-market buyback of 90 million shares over the next three days.
GM, which also owns stakes in Japanese automakers Isuzu Motors Ltd. and Suzuki Motor Corp., said any cash proceeds and potential gain from the sale will be recorded in the fourth quarter.
This is the second time this year that GM -- facing a deepening financial crisis and dealing with growing financial costs following a downgrade of its debt to junk status -- has ended an alliance.
In February, GM said it would pay Fiat SpA $2 billion to exit a five-year partnership and hand back its 10 percent stake in loss-mired Fiat Auto.
JPMorgan analyst Himanshu Patel said the proceeds from the sale of GM's Fuji Heavy stake, worth nearly $800 million, could be used to bail out its former subsidiary Delphi Corp.
"This timing of this pending divestiture cannot be overlooked," Patel said in a research note. "We would argue that proceeds from this sale could be used to partly finance employee packages at Delphi."
U.S. parts maker Delphi, which has struggled since its spinoff from GM in 1999, had said it needed help from the automaker to restructure money-losing operations or it would consider a Chapter 11 bankruptcy filing covering its U.S. units.
The automaker appears to be nearing a deal with the United Auto Workers union to cut its annual health-care costs, The Detroit News reported Wednesday.
The newspaper, citing people familiar with the talks, said the deal under discussion likely would shave at least $1 billion from GM's annual health-care bill.
GM expects its health-care costs to total nearly $6 billion this year.