Hummer plans to invest $9.4 million over five years and take advantage of tax credits to set up a Michigan headquarters after China's Tengzhong acquires the brand from General Motors Co, a Hummer spokesman said on Tuesday.

Hummer LLC has received $20.6 million in state tax credits over 10 years to locate its headquarters in Michigan, contingent on the sale completion, Hummer spokesman Nick Richards said.

GM announced a preliminary agreement to sell Hummer to the little-known machinery maker Sichuan Tengzhong Heavy Industrial Machinery in June. The companies have been negotiating a definitive agreement since then.

Richards said on Tuesday that GM and Tengzhong were making progress in the negotiations, which would then have to go through a regulatory process.

Terms of the sale were not expected to be released until there is a definitive agreement.

The Hummer brand, with its large SUVs derived from a military vehicle, has been both embraced and reviled for the size of the vehicles and their low fuel economy.

The brand is headquartered in Detroit with GM and expects to establish a headquarters in southeast Michigan that would initially employ 100 people and increase to 300 over several years, Richards said.

Another 641 jobs could be created indirectly from increased economic activity driven by the project, according to Michigan Economic Development Corp. estimates.

Hummer has looked at multiple facilities in southeast Michigan, Richards said. The headquarters staff would lead global design, engineering, product planning, purchasing, sales and other tasks. The deal between GM and Tengzhong includes long-term contract assembly and supply agreements.

Hummer would contract to build the H3 and H3T pickup truck at GM's plant in Shreveport, Louisiana, through at least 2010. The H2 would also continue to be built by AM General in Mishawaka, Indiana, during a transition period.

(Reporting by David Bailey, editing by Maureen Bavdek)

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