Auto financing company Ally Financial will pay the United States government more than $5.2bn to buy back preferred stock that the government got for bailing out Ally in 2009, The Associated Press reported on Tuesday.
The move is a likely step by Ally toward exiting government ownership. Taxpayers also own 74 per cent of Ally’s common stock.
All the shares were granted in exchange for a $17.2bn bailout of the lender.
Ally also will pay dividends plus $725m for the government to give up rights to convert the preferred stock to common shares.
With the move, Ally will have repaid roughly $12bn. That means the government is still about $5.2bn in the hole on the Ally deal.
Ally also says it will sell nearly 167,000 common shares to investors for $1bn.