GM Makes Bid For Ally's Overseas Operations
DETROIT (AP) — General Motors Co. said Monday that it submitted a bid for Ally Financial's international operations, a move that would more than double the assets of its financing arm, but also significantly increase its debt.
The Detroit-based automaker said in a filing with the Securities and Exchange Commission that after Ally announced plans to sell its operations in Canada, Mexico, Europe and Latin America, GM's financing arm, along with a number of other outside parties, submitted bids last month. GM did not say in its filing how much it offered to pay.
But if GM Financial is the successful bidder, the addition of the overseas auto loan, banking and insurance operations could potentially more than double its assets, while also substantially increasing its debt. GM said that depending on how much of the operations it's able to acquire, its debt and other liabilities could potentially more than double.
Ally, which is 74 percent owned by the U.S. government, was GM's financial arm until the banking industry meltdown in 2008 and was formerly known as General Motors Acceptance Corp. It needed a $17.2 billion bailout to survive the downturn and has so far only paid back part of that amount. The government is hoping to get the rest of the money back through a public stock offering by Ally, or perhaps the sale of its remaining businesses.
The company's troubled mortgage business, Residential Capital LLC, filed for Chapter 11 bankruptcy protection in May. At the same time, the company said that it was exploring the possible sale of its international operations, a move that also should help strengthen its finances and make payments to the government.
Earlier this month, Ally said it posted an $898 million second-quarter loss, hurt by a $1.2 billion charge related to ResCap.
GM shares fell 5 cents to $20.49 in midday trading.