The US Treasury has unveiled a US$6 billion (Dh22bn) package to assist GMAC, the troubled financial arm of General Motors seen as vital to the survival of America's largest automaker.
The Treasury said in a statement yesterday that it would purchase $5bn in senior preferred equity with an eight per cent dividend from GMAC, which is also partially owned by Chrysler parent company Cerberus Capital Management, and make a $1bn loan to General Motors.
In exchange, the Treasury would receive warrants from GMAC in the form of additional preferred equity equal to five per cent of the preferred stock purchase and would be paid a nine-per cent dividend if used.
GMAC said the sale of its preferred membership interests and warrants to Treasury was completed yesterday.
"GMAC Financial Services ... has sold five billion dollars of GMAC's preferred membership interests and warrants to the US Department of the Treasury as a participant in the Troubled Assets Relief Program (TARP) established under the Emergency Economic Stabilization Act of 2008," GMAC said in a statement.
The GM loan comes on top of a $13.4bn rescue loan package the US government approved this month for GM and Chrysler to stave off collapse amid tight credit and dismal sales. GM would receive an additional $4bn from February pending congressional approval.
The Treasury said it agreed to the additional one-billion-dollar loan "so that GM can participate in a rights offering at GMAC in support of GMAC's reorganisation as a bank holding company". The reorganisation was approved by the US Federal Reserve on Dec 24.
GMAC faced possible bankruptcy, jeopardising financing for GM car dealers and customers, and its demise could have dragged down the Detroit automaker's fortunes with it.
GMAC has lost $5bn over the past six months in investments in the plagued automobile and real estate sectors.
But the company has stressed that acquiring bank holding company status ? and access to federal TARP bailout funds ? would help restore stability to the company seen as crucial to GM's survival.
"The company intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles," GMAC said.
The Treasury said the GMAC plan is "part of a broader programme to assist the domestic automobile industry in becoming financially viable." Under the agreement, GMAC must also comply with enhanced restrictions on executive compensation.
The funds for all automaker loans were to come from the TARP, the $700bn government bailout plan initially introduced earlier this year to shore up financial firms, the Treasury said.
The Treasury announced on Dec 19 a massive rescue of cash-strapped GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.
*AFP
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
BeIN Sports currently has the rights to show
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- Wimbledon and other tennis majors
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Stree
Producer: Maddock Films, Jio Movies
Director: Amar Kaushik
Cast: Rajkummar Rao, Shraddha Kapoor, Pankaj Tripathi, Aparshakti Khurana, Abhishek Banerjee
Rating: 3.5
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Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Key facilities
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Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
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APPLE IPAD MINI (A17 PRO)
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Power: 579hp
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Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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The specs: 2017 Dodge Viper SRT
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Transmission Six-speed manual
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