General Motors Corp., seeking a federal bailout as its cash dwindles, said Monday it will raise ¥22.4 billion, or $230 million, by selling its 3 percent stake in Suzuki Motor Corp.
Suzuki said it will use cash to buy back its own stock Tuesday at ¥1,363 a share.
"We are responding to GM's need to let go of its stake to raise funds," Suzuki Chairman Osamu Suzuki said. "This will not have an impact on our management policy."
GM is selling its stake in Suzuki as it seeks to avoid a collapse that would cost the U.S. government as much as $200 billion, according to IHS Global Insight Inc.
GM, Ford Motor Co. and Chrysler LLC are struggling with mounting losses amid their worst sales year since 1991.
"We highly value our strategic relationship with Suzuki," GM CEO Rick Wagoner said. "This action will have no impact on our existing bilateral business relationships."
GM first invested in Suzuki in 1981 and held as much as 20 percent of the Japanese carmaker after doubling its stake in 2001. In 2006, GM raised almost $2 billion by selling a 17.4 percent stake at ¥2,490 a share.
At that share price, GM would have raised ¥40.8 billion for the stake it will sell Tuesday. As of Sept. 30, Suzuki had ¥119 billion in cash on its balance sheet.
Suzuki has a joint venture with GM in Canada producing XL7 sport utility vehicles.
Suzuki said Nov. 5 it would halt production of the SUV by year's end as industrywide demand slumps. Suzuki produces the Escudo SUV at GM's plants in Argentina and a V-6 engine designed by GM at its Sagara plant in Shizuoka Prefecture.