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GM's Allison Unit Buyout Faces Hurdle: WSJ

Reuters
Monday, 23 Jul 2007 | 11:11 PM ET

A $3.1 billion debt sale to pay for the buyout of General Motors' Allison Transmission unit has been postponed, the Wall Street Journal said on its Web site on Monday, citing an unnamed source.

Underwriters, including Citigroup, Lehman Brothers and Merrill Lynch, were planning to sell the loans to investors, the paper reported.

The firms will now try to distribute the loan among a small group of banks, the paper said.

GM agreed in June to sell the Allison Transmission unit for $5.6 billion to private equity firms Carlyle Group and Onex Corp.

The deal is being financed by $3.5 billion in corporate loans and $1.1 billion in junk bonds, the paper said.

The junk bonds have not been offered to investors yet, the paper said, adding that the buyout was still on track to be completed in the third quarter. Citigroup, Lehman Brothers, Merrill Lynch and GM could not be reached immediately for comment.

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