GM Sells $1 Billion In Ally Stock
WASHINGTON - General Motors Co. is selling all of its fixed-rate perpetual preferred stock in Ally Financial Inc. for $1 billion, it said Tuesday.
The sale should close by the end of the week.
GM sold a 51 percent stake in GMAC, which was renamed Ally Financial, to Cerberus Capital management LP for $7.4 billion in 2006, reported The Detroit News.
As part of the sale, GM received preferred stock valued at $1.4 billion in 2006.
"Today, we are taking another step forward in our strategy to strengthen and simplify the company's balance sheet," said Chris Liddell, GM's outgoing vice chairman and chief financial officer.
After GM exited bankruptcy, it valued its Ally Financial stake at $665 million.
The transaction will result in a gain of $300 million to be recorded in the first quarter of 2011.Following the sale, GM's investment in Ally Financial will shrink to a 9.9 percent interest in Ally commonstock.
Ally Financial is 74 percent owned by the U.S. Treasury, which gave the Detroit-based auto and mortgage lender a $17.2 billion bailout.
The company hopes to launch an IPO later this year and may file its prospectus by the end of June.
Treasury Department representatives 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 money 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 Treasury Department hopes to get back more taxpayer money through a public stock offering of Ally.
More Industry

Penske Auto Group Deal a Record
The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.
Read More →
War Toll a Damper on Used Auto Prices
Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.
Read More →
Bridge the Maintenance Gap
With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.
Read More →
California Store Has New Owner
The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.
Read More →
BMW Plant Pursues Cleaner Energy
BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.
Read More →
Auto Affordability Inches Up
The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.
Read More →
Ohio Auto Group Under New Ownership
After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.
Read More →
RV Group Expands Carolina Footprint
Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.
Read More →
Agent Acumen
An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.
Read More →
Missed Maintenance Creates Opportunity
As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.
Read More →