DETROIT, Tue May 15, 2012 – Ally Financial is “absolutely not” looking to sell its core U.S. auto lending business as it seeks ways to pay back $12 billion it owes to U.S. taxpayers after a government-funded bailout during the financial crisis, the company’s CEO said Tuesday.
Ally, the former in-house financing arm for General Motors Co., on Monday announced plans to sell some international operations at the same time that its Residential Capital mortgage unit filed for bankruptcy protection.
Monday’s actions give Ally some flexibility in finding ways to pay back the $12 billion, CEO Michael Carpenter said in a conference call with analysts on Tuesday.
The company could still pursue an initial public stock offering, find private-equity firms to buy out the stake owned by the U.S. Treasury, release capital or pursue acquisitions, Carpenter said.
“We will have created optionality and opportunity as a result of these steps,” he said.
Ally last year filed for an initial public stock offering, but shelved those plans after its mortgage woes mounted and the European debt crisis roiled markets. That has led to speculation that the company might have to sell itself as a whole or in pieces to pay back taxpayers.
Ally has repaid about one-third of the $17 billion it received from the U.S. government and expects to return another third after selling its international auto, banking and insurance operations, Ally has said.
Citigroup Inc. and Evercore Partners Inc. are advising the company on the sale of its international businesses. Ally is looking to sell these operations by year-end, Carpenter said.
GM, the largest U.S. automaker, is interested in buying Ally’s international operations, GM’s chief executive told Bloomberg on Monday.
UBS analyst Colin Langan said on Monday that GM could be interested in parts of Ally’s U.S. operations, such as its dealer wholesale and leasing units. GM could pay $7.6 billion for Ally’s international, dealer wholesale and lease operations, he said.
GM is “probably not” interested in acquiring Ally’s U.S. operations, CEO Dan Akerson told Bloomberg.