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U.S. gov’t to inject $7.5 bln more into GMAC

Published: 20/05/2009 05:00

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The U.S. Treasury Department is preparing to invest an additional 7.5 billion dollars in GMAC LLC, the Detroit-based auto finance company, in a deal that could allow the U.S. government to hold a majority stake in the company, reports reaching here said Wednesday.

GMAC, whose financial good health is key to providing loans forconsumers to buy General Motors Corp. and Chrysler LLC vehicles, has been in talks for several weeks to secure additional capital. It had hoped to close the deal last week, a Detroit News report said.

In December, the U.S. Treasury invested 5 billion dollars in GMAC by buying preferred stock in the finance company. That stock carries a 9 percent dividend, but has no voting rights. The U.S. Treasury Department also loaned GM nearly 900 million dollars to buy GMAC stock.

If the Treasury exercised its options from those investments, which would give it voting rights, it could own about 35 percent of GMAC, a person familiar with the matter was quoted as saying.

According to the person, the additional 7.5 billion dollars could allow the Treasury Department to claim a majority stake in GMAC, if it chose to do so.

The Treasury Department and Federal Reserve Board this month announced GMAC needs 11.5 billion dollars in additional capital reserves as the result of government stress tests. The additional assistance to be announced this week is likely not the end of government support for GMAC.

VietNamNet/Xinhuanet

Provide by Vietnam Travel

U.S. gov’t to inject $7.5 bln more into GMAC - International - News |  vietnam travel company

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