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Before General Motors sold its controlling stake of GMAC (now Ally Financial) to Cerberus, the company's captive finance arm was among its largest profit centers. But as the company's debt piled up, it sold off the lion's share of GMAC to keep collectors at bay. But almost as fast as that happened, the auto industry and the global economy took a dive, and GMAC began to reject most every loan The General threw its way.
Fast forward to 2011, and GM has announced the sale of its $1 billion worth of Class A shares of Ally. The sale of the company's outstanding shares will allow the automaker to claim an additional $300 million profit for the first quarter of 2011. Chief financial officer Chris Liddell says that the automaker is "taking another step forward in our strategy to strengthen and simplify the company's balance sheet."

Even with GM's announced preferred stock sale, the automaker will still own 9.9 percent of Ally's common shares. Hit the jump to read over GM's announcement.

[Source: GM]
Show full PR text
DETROIT – General Motors Company (NYSE: GM) today announced the sale of all of its shares of Fixed Rate Perpetual Preferred Stock, Series A, of Ally Financial Inc. in a registered public offering for a total of $1.0 billion.

The shares, which represent 100 percent of the Ally Series A preferred stock outstanding, have an aggregate liquidation preference of $1 billion.

"Today, we are taking another step forward in our strategy to strengthen and simplify the company's balance sheet," said Chris Liddell, vice chairman and chief financial officer.

The transaction will result in a book gain of $0.3 billion to be recorded in the first quarter of 2011. Following the sale, GM's investment in Ally Financial will consist of a 9.9 percent interest in Ally common stock.

The offering was underwritten by Credit Suisse, BofA Merrill Lynch, Deutsche Bank Securities and Barclays Capital. This news release shall not constitute an offer to sell or the solicitation of an offer to buy any security.

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    • 1 Second Ago
      • 3 Years Ago
      I'm sitting here trying to figure out the title..huh? Ohhhh GM sells OFF..lol Good morning!
        • 3 Years Ago
        speaking of gm jd power says ford will out sell gm this month , because gm spend alot on incentives during february and pulled alot of sales forward.
      • 3 Years Ago
      A FULL $300!!! AMAZING!!!
      • 3 Years Ago
      wow, i think my 9 year old is available for proof reading if you need her.
        • 3 Years Ago
        I will gladly loan out my Aunt's pet chimp to help AB with it's editing efforts.
      • 3 Years Ago
      Doesn't (didn't...?) Cerebrus own Chrysler LLC?
        • 3 Years Ago
        Yes. GMAC (Ally) has been more largely owned by Chrysler's owners than by GM for quite some time now.
      • 3 Years Ago
      Only in Obama America could a company walk away from 169 billion in liabilities, survive and have dumb Americans still buy their cars. Then sell off stock in a renamed money losing company and make a billion.

      Amazing. I can't get my mortgage refinanced, but these banks and companies can get bailed out and go on. Continuing to do what they did before.

      What a joke. America is dead. We've sold out to the globalists. Hope and change indeed.

      p.s. - why are we not impeaching Obama over Libya? His sec def admits they are not a threat to us or our interests. His own VP admits it's unconstitutional and vowed to impeach anyone who did what he did. AND...

      Obama himself in a speech said what he's just done is unconstitutional.

      Amazing. The rule of law is out the window. Things have changed, but I don't see any hope.
      • 3 Years Ago
      Actually, GMAC was turned into "Ally" so it could register as a "commercial bank" and receive more TARP funds. Now those funds are being turned into a $300 million profit. How how great for GM!! They are such a healthy company.

        • 3 Years Ago
        Technically, the change in name from GMAC to Ally was to differentiate them from GM, which was in danger of bankruptcy. Any financial entity was able to become a "bank" without changing it's name, like American Express (Bank) or Capital One (Bank). "Ally" was chosen to be a fuzzy, friendly sort of name in the hopes that it would distance it from both the fear of GM going bankrupt as well as the anger over the GM bailout.
        • 3 Years Ago
        GM didn't and doesn't have control over Ally anyway. That is cerberus, the guys who owned Chrysler. That is another reason for name differentiation.

        They are the primary financial beneficiaries of any GMAC bailout.
      • 3 Years Ago
      The auto industry and the global economy.
      selected car
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