General Motors Corp took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.

GM has an agreement to sell its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co of China, said a person briefed on the deal.

The Detroit automaker announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but it didn't identify the buyer. A formal announcement of the buyer was to be made Tuesday afternoon, said the person briefed on the deal.

The person spoke on condition of anonymity because the details have not been made public.

Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.

Sale to save 3,000 US jobs

GM said the sale will likely save more than 3,000 US jobs in manufacturing, engineering and at various Hummer dealerships.

As part of the proposed transaction, Hummer will continue to contract vehicle manufacturing and business services from GM during a transitional period. For example, GM's Shreveport, Louisiana, assembly plant would continue to contract to assemble the H3 and H3T through at least 2010, GM said.

The automaker also said Tuesday that it has 16 buyers interested in purchasing its Saturn brand, while three parties are interested in the Swedish Saab brand.

Chief Financial Officer Ray Young told reporters and industry analysts on a conference call that GM is continuing to pursue manufacturing agreements with a new Saturn buyer.

Money-losing Saturn brand

GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.

At the same time, bridge-loan discussions with the Swedish government are progressing, Young said.

GM, which filed for bankruptcy protection in New York on Monday, is racing to remake itself as a smaller, leaner automaker. In addition to its plan to sell the Hummer, Saab and Saturn brands, GM will also phase out its Pontiac brand, concentrating on its Chevrolet, Cadillac, Buick and GMC nameplates.

The company hopes to follow the lead of fellow US automaker Chrysler LLC by transforming its most profitable assets into a new company in just 30 days and emerging from bankruptcy protection soon after.

But GM is much larger and complex than its Auburn Hills-based rival and isn't up against Chrysler's tight June 15 deadline to close its deal with Fiat Group SpA.

Separately, the German government said Tuesday it paid out the first €300 million (US$425 million) in bridge loans to GM's Adam Opel GmbH division.

The loans are part of a deal to shrink GM's stake in Opel and shield it from GM's bankruptcy protection filing in the U.S.

Canadian auto supplier Magna International Inc. and Russian-owned Sberbank will acquire 55 per cent of Opel.

A sale of the Hummer brand had been expected. Chief Executive Fritz Henderson had said in April that the automaker was expecting final bids from three potential buyers within the month.

Rugged but fuel-inefficient

Critics had seized on the rugged but fuel-inefficient Hummer as a symbol of excess as GM's financial troubles grew and gas prices rose.

Sales at Hummer, which is known for models with military-vehicle roots, have been in a steep slide since gasolene prices rose to record heights last summer.

For the first four months of this year, Hummer sales are down 67 per cent.

GM nailed down deals with its union and a majority of its bondholders and arranged the Opel deal in order to appear in court Monday with a near-complete plan to quickly emerge with a chance to become profitable.

The government has said it expects GM to come out of bankruptcy protection within 60 to 90 days.

During Monday's hearing, GM attorney Harvey Miller stressed the magnitude of the case and the importance of moving GM through court oversight as fast as possible. He noted that the automaker only has about US$2 billion in cash left.

US Judge Robert Gerber moved swiftly through more than 25 mostly procedural motions during the automaker's first-day bankruptcy hearing.

Gerber set GM's sale hearing for June 30, putting it on a path similar to that of Chrysler.

Objections are due on June 19, with any competing bids required to be submitted by June 22.

Government financing

Gerber also gave GM immediate access to US$15 billion in government financing to get it through the next few weeks, and interim approval for use of a total US$33.3 billion in financing, with final approval slated to be ruled on June 25.

The funds are contingent on GM's sale being approved by July 10. Gerber also approved motions allowing the company to pay certain pre-bankruptcy wages, along with supplier and shipping costs.

GM's filing for bankruptcy protection is the largest ever for an industrial company. GM, which said it has US$172.81 billion in debt and US$82.29 billion in assets, had received about US$20 billion in low-interest loans before entering bankruptcy protection.

- AP