U.S. to sell $3 billion of Ally stock, reducing stake to 37%

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WASHINGTON (Bloomberg) -- The U.S. Treasury Department plans to sell $3 billion of Ally Financial Inc. common stock, reducing taxpayers’ stake in the firm to 37 percent.

The U.S. will sell 410,000 shares for $7,375 apiece in a private offering and leave the government with about 572,000 shares of the auto lender, the Treasury said today in a statement. The government, which didn’t disclose a buyer, will work with the company to explore ways to further reduce the investment that may include a public offering or an additional private sale of common shares, according to the statement.

“The strong investor interest is a testament to the significant transformation of the company,” Ally CEO Michael A. Carpenter said in a separate statement.

Ally, known as GMAC when it was the captive-finance arm of the automaker that’s now called General Motors Co., won Federal Reserve approval to become a bank holding company in December 2008. The change enabled it to tap a U.S. rescue that swelled to $17.2 billion. Taxpayers still held a 64 percent stake in Ally as of Nov. 20, according to the company.

Citigroup Inc. and Bank of America Corp. are placement agents on the offering, the Treasury said. Lazard Ltd. is the Treasury’s financial adviser on the management and disposition of the investment in Ally.

TARP investments

After the sale, the U.S. will have recouped about $15.3 billion, or 89 percent, of the bailout Ally received as part of the Treasury’s Troubled Asset Relief Program, according to the statement. The U.S. will have recovered about $435.8 billion on all of its TARP investments, more than the $422.2 billion disbursed under the program, Treasury said.

The bailout left taxpayers with a 74 percent stake and Carpenter with the task of rebuilding the company. Burdened by shoddy mortgages, Ally began reporting losses in 2007 that reached $10.3 billion in 2009. With the firm on the brink of failure, the U.S. engineered a rescue to ensure money kept flowing to the auto industry and preserved jobs.

Carpenter, 66, has wound down mortgage operations that fueled losses and sold other assets. Ally won Fed approval last month to convert to financial holding company status as it seeks to retain an insurance unit and SmartAuction Web site for dealers.

The firm reported more than $760 million in revenue from insurance premiums and other services through the first nine months of 2013. SmartAuction has sold more than 4 million vehicles since 2000, Ally said.

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