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Lengthy government ownership predicted
By Jonathan Stempel |
May 25, 2009, Monday
|
Print Edition
Print Edition
GMAC LLC, which is giving the United States Treasury Department a 35.4 percent equity stake, said it might take 17 years for the government to shed its investment if the auto and mortgage lender were to go public.
The timetable suggests that federal involvement in GMAC could persist long after troubles plaguing the economy and the auto industry end.
GMAC has received US$12.5 billion of government infusions since December, including US$7.5 billion on Thursday.
The department separately said on Thursday that it expects to swap a previous US$884 million loan it made to General Motors Corp for the 35.4 percent stake in GMAC. It also won the right to appoint two directors to GMAC's board.
In a US Securities and Exchange Commission filing, Detroit-based GMAC said that if it were to go public, the department would begin to liquidate its stake no later than seven years after an initial public offering.
It said the government would thereafter have a "goal of liquidating between 10 percent and 20 percent of the Treasury's interest in GMAC's equity securities in each succeeding year."
The US$7.5 billion includes US$4 billion for GMAC to lend to Chrysler LLC dealers and vehicle buyers, and US$3.5 billion to bolster GMAC's capital position. The sums are on top of US$5 billion that GMAC got in December from the government's Troubled Asset Relief Program.
GMAC is the preferred lender to customers of GM and Chrysler vehicles.
The timetable suggests that federal involvement in GMAC could persist long after troubles plaguing the economy and the auto industry end.
GMAC has received US$12.5 billion of government infusions since December, including US$7.5 billion on Thursday.
The department separately said on Thursday that it expects to swap a previous US$884 million loan it made to General Motors Corp for the 35.4 percent stake in GMAC. It also won the right to appoint two directors to GMAC's board.
In a US Securities and Exchange Commission filing, Detroit-based GMAC said that if it were to go public, the department would begin to liquidate its stake no later than seven years after an initial public offering.
It said the government would thereafter have a "goal of liquidating between 10 percent and 20 percent of the Treasury's interest in GMAC's equity securities in each succeeding year."
The US$7.5 billion includes US$4 billion for GMAC to lend to Chrysler LLC dealers and vehicle buyers, and US$3.5 billion to bolster GMAC's capital position. The sums are on top of US$5 billion that GMAC got in December from the government's Troubled Asset Relief Program.
GMAC is the preferred lender to customers of GM and Chrysler vehicles.
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