US government converts preffered stock of Ally Financial into common shares

Article by Christian A., on January 4, 2011

As the U.S. government converted $5.5 billion of preferred stock into common shares, Ally Financial Inc. is inching closer to reclaiming its independence. Ally is formerly the lending unit of General Motors.

In a statement issued by the department recently, the swap involves nearly half of the Treasury Department's preferred stock and enhances the U.S. taxpayers' stake to 74% of Ally's common shares from 56.3%.

According further to the statement, this move (like a planned sale of several trust preferred securities held by the U.S.) is meant to “accelerate Treasury's ability to exit its investment.”

The government hopes to recover its $17.2 billion investment linked to Detroit-based Ally as CEO Michael Carpenter prepares the company for an initial public offering.

Formerly known as GMAC Inc., Ally nearly collapsed during the global economic crisis as defaults on its home mortgages surged and credit markets shunned the company's debt.

Mirko Mikelic said that Treasury officials aim to “get out of their stake,” in the coming year. Mikelic, a senior money manager who helps watch over $14 billion of fixed- income assets at Fifth Third Asset Management in Grand Rapids, Mich., also said that it’s a “pretty good sign” for Ally that it can operate as a standalone entity.

A Treasury official said that the recent transaction normalizes the capital structure, helping the government with its exit strategy. [via autonews - sub. required]

If you liked the article, share on:

Comments

Recommended

While Honda’s new 2018 HR-V will be rolling out at the dealerships with just a few updates, the company is certainly not giving up its spot as the best-selling vehicle...
by - August 18, 2017
Like it or not, Chevrolet may soon be offering a cheaper Camaro in hopes of competing with Dodge Challenger and Ford Mustang GT. Apart from the less expensive trim, the...
by - August 17, 2017
Recently, Porsche revealed a new Macan Turbo wearing a Performance Package and a unique Porsche Motorsport themed paint. At first look, it will remind you of the 919 Hybrid and...
by - August 17, 2017
The BMW M1 will be one of the most exclusive cars that will be showcased at the upcoming 2017 Pebble Beach Concours d'Elegance, alongside many other extravagant models. Firstly, there...
by - August 17, 2017
Aston Martin Vanquish Zagato makes its debut with a total of four variations including the Speedster and the Shooting Brake trims. As part of the limited edition model, the company...
by - August 17, 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