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

Recommended

Dubai is one of the few countries where expensive cars are the norm, many of which are specially modified as well. And this just in: Bentley has debuted the new...
by - November 21, 2017
The 2018 Jaguar XEL with its stretched-out wheelbase and longer doors is the newest addition to the growing list of premium sedans in China---joining the ranks of Mercedes-Benz C-Class L,...
by - November 21, 2017
Honda this week announced that its all-new 2018 Clarity Plug-in Hybrid will arrive at US dealerships with a starting price of $33,400 beginning on the first of December. Because the...
by - November 21, 2017
Lamborghini had been expected to refresh its entry-level model – the Lamborghini Huracan – in late 2018 or early 2019. But here is some good news for fans of the...
by - November 20, 2017
The Chevrolet Corvette will be turning 65 years old in 2018, and as part of the celebrations, the brand is introducing a special edition C7 – the Chevrolet Corvette Carbon...
by - November 19, 2017
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