Tags: US | GM | Ally | Share | Sale

GM to Sell Preferred Shares of Ally for $1 Billion

Wednesday, 23 Mar 2011 01:53 AM

 

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General Motors Co. said it will sell all of its series A preferred shares in Ally Financial Inc., its former finance arm, for $1 billion.

The shares to be sold represent all of Ally's series A preferred stock outstanding, the automaker said.

GM received nearly $50 billion in government bailout aid during the financial crisis and emerged from bankruptcy protection in July 2009. It said the sale of Ally shares is another step in its strategy to bolster its balance sheet.

The sale is expected to bring a $300 million gain for GM for the first quarter and leave it with a 9.9 percent stake in Ally's common stock, the company said.

The government owns 74 percent of Ally.

Ally received $17.2 billion in bailout support. So far it has returned $4.9 billion to the government.

The sale was underwritten by Credit Suisse, BofA Merrill Lynch, Deutsche Bank Securities and Barclays Capital.

Treasury Department spokesmen declined to comment Tuesday on GM's announcement.

Ally makes loans to GM customers and finances dealer inventories. The government first bailed out the company, then known as GMAC Inc., in late 2008 as part of the Bush administration's aid to the auto industry. The Obama administration provided additional funding in May and December 2009.

The Treasury Department has said that Ally has made good progress in restructuring its operations. But a congressional oversight panel in January criticized what it called Treasury's "hands-off" approach toward Ally. The panel noted that the department declined to block GM's purchase of Texas-based AmeriCredit even though that financial firm could end up competing against Ally.

The Treasury Department hopes to get back more taxpayer money through a public stock offering of Ally.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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