GMAC Changes Into A Corporation, Opening Up IPO Option
02 Juli 2009 - 12:06AM
Dow Jones News
GMAC Inc., formerly GMAC LLC, said Wednesday that the lender
changed its company structure from a limited liability company to a
corporation.
The transformation, announced in a regulatory filing, would
allow GMAC the option to become a publicly traded company through
an initial public offering of its shares. Currently on federal
support, a corporation status could provide GMAC with an exit
strategy when and if it chose to wean itself off government
help.
"The incorporation is another step in our transformation to an
independent financial services company," said Gina Proia, a GMAC
spokeswoman.
The giant lender now serving Chrysler LLC as well as General
Motors Corp. (GMGMQ) is seen as crucial to the survival of the
struggling auto makers while they restructure their operations in
bankruptcy court. GMAC provides loans to auto dealers who use the
funds to stockpile their inventory of new vehicles. GMAC also lends
to consumers buying these vehicles.
GMAC, weighed down by piling losses on its auto and mortgage
business, transformed itself into a bank-holding company in
December in attempts to garner federal funding.
The U.S. Treasury Department said in May it would swap $884
million of its existing $5 billion preferred-stock investment for
common stock, giving the U.S. government a 35.4% equity stake in
the lender. This stake could increase to more than 50% if GMAC,
amid potential mounting losses and meager capital levels, was to
convert the government's investments into common equity.
As part of its efforts to be recognized as an independent
lender, GMAC, the former financing arm of GM, has also rebranded
its bank unit, which is now known as Ally Bank.
-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729;
aparajita.saha-bubna@dowjones.com
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