28 dec. 2008

GM becomes a bank to gain access to more funds

General Motors (GM) has gained access to billions of extra dollars in US Government assistance when the Federal Reserve approved an application for the struggling car maker's finance arm to become a bank.

The approval came a week after the Government said that it would provide $17.4 billion in emergency loans to GM and rival Chrysler to help them cope with plunging car sales.

As a bank holding company, GMAC, which gives loans to about 80 per cent of GM car dealers so that they can stock their showrooms, will have access to the $700 billion banks bailout agreed by the US Government in October, plus the ability to take out emergency loans with the Fed and to issue Government-guaranteed debt.

In return, GM and Cerberus Capital Management, the private equity firm with a major stake in GMAC, will be forced to reduce their holdings in the finance company. In 2006 Cerberus headed a consortium that paid GM $7.4 billion for a 51 percent stake in GMAC..... More here

Sursa : Times Online

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