Ally Financial to pay $5.9 billion in a plan to buy back preferred shares

Article by Anita Panait, on August 25, 2013

Ally Financial Inc. is raising $1 billion in a private placement and is planning to pay $5.9 billion in a plan to buy back preferred shares owned by the United States Treasury Department. Ally’s moves are aimed at boosting the auto lender’s finances as it resubmits its capital plan to federal regulators. The transaction includes the termination of an option that would have allowed the Treasury to get more common stock if Ally's share value drop below a certain level.

The auto lender is seeking for ways to repay a $17.2-billion US bailout during the global credit crisis, when subprime home loans exposed the company to failure. Ally chief executive Michael Carpenter refocused the company on auto lending and has been disposing assets to raise its finances while remaining open to the possibility of an initial stock offering.

Carpenter said in the statement that the actions they have announced will clear the way for Ally to “pursue the next steps to ultimately exit" the government bailout.

Terms include a $5.2 billion in cash payment to the Treasury of buy back $5.94 billion par value of the mandatorily convertible preferred shares, and $725 million to terminate the option.

The deal requires the funding of the private placement to occur by Nov. 30, 2013. The agreement also depends on the Fed giving green light to Ally's revised capital plan, among other conditions. The US still hold common shares in Ally, giving it a 74-percent stake. [source: Bloomberg]

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Nearly all details have been set with regards to the upcoming market introduction of the new Jaguar I-Pace. Its production version was recently previewed at the 2016 Los Angeles Auto...
by - December 8, 2016
WM Motor, a new China-based automaker, recently revealed its forthcoming lineup consisting of affordable electric vehicles. While there is a company is the U.S. that has the same name, they...
by - December 8, 2016
Even when Aston Martin has been mum about the upcoming AM-RB 001 hypercar, Marek Reichman at least has something new to say. In a recent interview with Australia’s Motoring, the...
by - December 8, 2016
The people at Mercedes-Benz are rejoicing. This is simply because for the first time since 1979, Mercedes-Benz has assembled 20,000 – and still counting – examples of the Mercedes-Benz G-Class....
by - December 8, 2016
When Donkervoort Automobielen BV unveiled its Donkervoort D8 GTO-RS limited edition in May 2016, customer interest has been so overwhelming that the Lelystad, Netherlands-based carmaker sold out this one-of-a-kind vehicle...
by - December 8, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries