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U.S. throws GMAC $6 billion lifeline
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| Contributor | Jason |
| Last Edited | Jason Dec 29, 2008 10:20pm |
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| Category | News |
| News Date | Tuesday, December 30, 2008 04:00:00 AM UTC0:0 |
| Description | NEW YORK (CNNMoney.com) -- In yet another move to prop up the crumbling U.S. auto industry, the government announced Monday that it will pump $6 billion into GMAC Financial Services, a financing company critical to the survival of General Motors.
The rescue package has two parts. The Treasury Department is injecting $5 billion directly into GMAC in exchange for preferred equity shares that pay an 8% dividend. GMAC also is issuing warrants to Treasury in the form of preferred stock. If exercised, the warrants will pay a 9% dividend.
Also, the government will lend $1 billion to GM that the automaker will invest in its financing arm. GMAC needs the funding to convert to a bank holding company, a necessary step to receiving the bailout money. |
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