Treasury claims majority stake in GMAC!
WASHINGTON - December 30. 2009 - The Treasury Department agreed to invest another $3.8 billion in Detroit-based GMAC and will own a majority of the auto finance company.
In all, the government will have invested $17.2 billion in GMAC and now holds 56.3% of the company, up from 35.4%. The latest infusion is less than the $5.6 billion forecast earlier this year. The government swapped $3 billion of its investment for the increase in its equity in GMAC.
The Treasury will have the right to appoint two additional directors to the GMAC board of directors. Four of nine directors ultimately will be appointed by Treasury. The Treasury intends to nominate its new directors in time for GMAC's annual meeting at the end of April.
"These actions fulfill Treasury's commitments made in May to GMAC in a manner which protects taxpayers to the greatest extent possible. These actions offer the best chance for GMAC to complete its overall restructuring plan and return to the private capital markets for its debt financing and capital needs in 2010," the department said in a statement.
GMAC said much of the new capital was being used to restructure its money-losing ResCap unit and mortgage business.
"These decisive balance sheet actions and resulting capital infusions are intended to minimize the impact on GMAC and Ally Bank of any significant future losses related to ResCap's legacy mortgage business," said GMAC CEO Michael A. Carpenter. "By protecting the financial performance and strength of our core automotive finance operations, we expect to increase the pace at which we can fully repay the U.S. taxpayer."
In all, the government will have invested $17.2 billion in GMAC and now holds 56.3% of the company, up from 35.4%. The latest infusion is less than the $5.6 billion forecast earlier this year. The government swapped $3 billion of its investment for the increase in its equity in GMAC.
The Treasury will have the right to appoint two additional directors to the GMAC board of directors. Four of nine directors ultimately will be appointed by Treasury. The Treasury intends to nominate its new directors in time for GMAC's annual meeting at the end of April.
"These actions fulfill Treasury's commitments made in May to GMAC in a manner which protects taxpayers to the greatest extent possible. These actions offer the best chance for GMAC to complete its overall restructuring plan and return to the private capital markets for its debt financing and capital needs in 2010," the department said in a statement.
GMAC said much of the new capital was being used to restructure its money-losing ResCap unit and mortgage business.
"These decisive balance sheet actions and resulting capital infusions are intended to minimize the impact on GMAC and Ally Bank of any significant future losses related to ResCap's legacy mortgage business," said GMAC CEO Michael A. Carpenter. "By protecting the financial performance and strength of our core automotive finance operations, we expect to increase the pace at which we can fully repay the U.S. taxpayer."
