Treasury to buy $5 billion in shares, lend GM $1 billion
Written on December 31, 2008
The U.S. Treasury will inject up to $6 billion into GMAC as part of a plan to shore up the finances of GM’s lending arm and the U.S. auto industry, President George W. Bush’s administration said Monday.
Under the plan, the Treasury will buy $5 billion in preferred GMAC shares, paying an 8 percent annual dividend. It also will lend up to $1 billion to General Motors Corp. so that it too can buy additional equity in GMAC, which the Treasury could take on demand.
The Treasury said the money for the injection would come from the $700 billion financial industry bailout, and that GMAC would have to meet restrictions on executive pay as part of the deal.
Get more business news, blogs and opinionFiled in: technology.