GM Buys Additional Stake in GMAC
General Motorssaid in a Securities and Exchange Commission filing Friday that it used the proceeds of an $884 million Treasury department loan to increase its equity stake in its financing arm to about 60 percent.
GM had previously held a 49 percent stake in GMAC, with the remaining 51 percent held by New York-based private equity firm Cerberus Capital Management.
As part of the federal bailout for GMAC approved late last year, the financing company received $5 billion from the government's $700 billion bank rescue package.
In addition, Treasury also said it would lend GM up to $1 billion so that the automaker could buy additional equity offered by GMAC as part of its effort to raise more capital.
The help came after the Federal Reserve approved GMAC's application to become a bank holding company, making it eligible for a piece of the bank bailout. As part of that deal, GM agreed to reduce its stake to less than 10 percent of the voting and total equity interest of GMAC.
GMAC said in Friday's filing that it will reduce its stake in GMAC before March 24 by placing the excess equity into a trust that will be overseen by an independent trustee.
Cerberus, which led an investment group that bought a 51 percent stake in GMAC from the automaker for $14 billion in 2006, will reduce its stake in GMAC to no more than 33 percent of total equity.