Traverse City Record-Eagle
---- — DETROIT (AP) — Auto financing company Ally Financial will pay the U.S. government more than $5.2 billion to buy back preferred stock that the government got for bailing out Ally in 2009.
The move is a likely step by Ally toward exiting government ownership. Taxpayers also own 74 percent of Ally’s common stock. All the shares were granted in exchange for a $17.2 billion bailout of the lender.
Ally also will pay dividends plus $725 million for the government to give up rights to convert the preferred stock to common shares.
With the move, Ally will have repaid roughly $12 billion. That means the government is still about $5.2 billion in the hole on the Ally deal.
Ally also says it will sell nearly 167,000 common shares to investors for $1 billion.