Ally not looking to sell U.S. auto lending: CEO

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.

Ally hopes to end mortgage woes with ResCap bankruptcy

NEW YORK | Mon May 14, 2012 – Ally Financial Inc.’s mortgage unit on Monday filed for bankruptcy and the auto lender said it will sell some international operations to help set it on a path to repaying $12 billion in bailout money.

Ally’s mortgage unit, called Residential Capital, or ResCap, filed for bankruptcy protection in federal court in Manhattan under a plan that has the support of some of its creditors, although it was still expected to be a drawn-out and litigious process.

At the same time, Nationstar Mortgage Holdings, which is majority owned by Fortress Investment Group, struck a deal to buy substantially all the mortgage servicing and related assets from ResCap for about $2.4 billion, including debt. The deal will make Nationstar the opening bidder in an auction that will be held under bankruptcy court rules.

“The single-most important thing we can do for the U.S. taxpayer is to not put billions of dollars into this business on a going-forward basis,” Ally CEO Michael Carpenter said in an interview.

Ally, the former lending arm of General Motors Co., has been besieged in the past few years by losses at ResCap, which was once a major subprime lender and profit engine. The company has considered bankruptcy and other ways to shed ResCap since at least 2009, but has never pulled the trigger.

A bankruptcy of ResCap now will help Ally, formerly known as GMAC, focus on its main auto lending business and put together a plan to pay back U.S. taxpayers.

The U.S. Treasury Department injected $17 billion into the lender through multiple bailouts during the financial crisis and now owns nearly 74 percent of the company. Ally still owes the government about $12 billion, counting dividend payments by the lender and sale of some securities by the Treasury.

The bankruptcy filing comes as pressure increases on Ally to repay that money and problems at ResCap become increasingly unmanageable. The Obama administration is trying to show recoveries from crisis-era bailouts before the presidential election in November, and government officials are loath to let Ally become a black mark on the auto industry restructuring.

In filing for bankruptcy, ResCap would also become a rare example of a subsidiary of a bank holding company to do so. As a result, other banks with intractable mortgage problems, such as Bank of America Corp., will be closely watching how the company deals with regulators and creditors and manages the bankruptcy process.

ResCap and its advisers believe it may be one of the first times that a financial services company with retail operations such as a bank has filed for bankruptcy and been able to continue operating.

Ally nears bankruptcy deal with Residential Capital creditors: source

DETROIT, Tue May 8, 2012 – Ally Financial and creditors of the lender’s Residential Capital unit are in general agreement on a plan to put the mortgage subsidiary into bankruptcy in a deal that could speed up and ease the process, a person familiar with the matter said.

Details of the agreement are still being worked out, the source said on Tuesday. A deal with creditors would help the lender file for a pre-packaged Chapter 11 bankruptcy that expedites a reorganization.

ResCap, as the unit is called, has been considering filing for bankruptcy by May 14 when it must repay a portion of its debt. A filing could come as soon as Sunday.

Ally spokeswoman Gina Proia declined to comment.

Ally, formerly known as GMAC and which was bailed out by the U.S. government during the financial crisis, is 74 percent owned by the government and owes taxpayers about $12 billion.

ResCap has been pummeled over the last few years by mortgage problems and has been at the heart of Ally’s woes. A ResCap bankruptcy is seen as the best way for Ally, whose core business is auto loans, to move ahead.

Ally has been negotiating with a group of creditors who hold more than 45 percent of junior secured notes at ResCap, sources have said previously.

Billionaire Warren Buffett’s Berkshire Hathaway holds another 45 percent of the junior secured notes and also holds a significant portion of ResCap’s unsecured notes that mature in May, sources have said previously.

Elliott Management urges Ally against ResCap bankruptcy

NEW YORK, Mon Mar 26, 2012 – Hedge fund Elliott Management sent a letter to Ally Financial’s board last week saying a bankruptcy filing for its mortgage subsidiary would trigger a protracted legal battle against the lender and make its proposed public offering “nearly impossible” for several years.

The New York-based hedge fund, which is one of Ally’s largest shareholders, said the bailed-out lender should pursue an out-of-court debt exchange for Residential Capital and sell its core assets to a financial institution, according to a March 22 letter sent to Ally’s board, a copy of which was reviewed by Reuters.

“The fact remains that addressing the risks in the mortgage business is the key to successfully pursing any and all future strategies to best position the company to return value to its shareholders and that is our highest priority,” an Ally spokeswoman said.

Elliott and U.S. Treasury declined to comment.

Elliott has 2.3 percent of the common stock of Ally, the former lending arm of General Motors Co. previously known as GMAC, according to the letter.

The U.S. Treasury owns a 73.8 percent stake after its bailout of the lender during the financial crisis, while GM and its trust have 9.9 percent and Cerberus Capital Management owns 8.9 percent.

The letter from Elliott comes as Ally is readying a ResCap bankruptcy in coming months, according to people familiar with the matter, in an effort to distance itself from the troubled mortgage business and put its stalled IPO back on track.

Ally’s mortgage unit seeking buyers, report says

DETROIT – Ally Financial Inc’s. mortgage unit Residential Capital LLC is speaking with private equity firms regarding selling itself to them through a pre-packaged bankruptcy, Bloomberg said quoting people with knowledge of the matter.

Fortress Investment Group, Cerberus Capital Management, Centerbridge Capital and Leucadia National Corp are being contacted by Ally to gauge their interest in the proposal, Bloomberg said.

Ally, formerly known as GMAC Financial Services, is seeking to limit the liabilities at the mortgage unit which is besieged with lawsuits related to its mortgage-linked securities, the report said.

The pre-packaged bankruptcy would allow Residential Capital to reach agreements with creditors and stakeholders before filing for court protection, the report said.

When contacted, Ally said it did not have any comment on the matter.

Last week, the auto and mortgage lender, which is 73.8 percent-owned by the U.S. Treasury after a series of bailouts during the financial crisis, posted a fourth-quarter loss on a $270 million charge to cover expected regulatory penalties levied against its mortgage unit.

Ally Financial delaying $6 billion IPO, sources reporting

NEW YORK ― Ally Financial, an auto and mortgage lender majority owned by the U.S. government, is delaying a $6 billion IPO due to bad market conditions, two sources familiar with the situation told Reuters.

The roadshow for the initial public offering was expected to launch late this week or early next week, which would have brought the company public before the U.S. July 4 holiday.

The S&P 500 index .SPX closed up 0.74 percent at 1,289 on Thursday, but had lost more than 6 percent in the last six days while Nasdaq had nearly erased its gains for the year.

Ally Financial’s IPO is expected to raise around $6 billion, including both common stock and convertible securities, one of the sources said. It will move ahead when the market improves, that source said.

The other source said that the IPO could now come in late July or early August, or after the September U.S. Labor Day holiday.

The sources declined to be named as the information is not public. Ally and the U.S. Treasury declined comment.

Bad mortgage loans forced the U.S. Treasury to pour $17.2 billion into Ally during the financial crisis. It has recovered some of that money through repayments and dividends and continues to hold a 73.8 percent stake in Ally, formerly known as GMAC.

The U.S. government is currently in the process of exiting other remaining financial crisis-era investments including GM and AIG.

It began exiting top U.S. automaker General Motors Co. with a record $23.1 billion IPO last November. In May, it sold 15 percent of its stake in insurer American International Group Inc.

GM shares closed on Thursday at $29.45, or 10.8 percent below their $33 IPO price.

AIG’s shares have also retreated since its $8.7 billion share sale. That sale raised less than the $10 billion to $20 billion some banking sources had suggested earlier in the year.

Apart from the Treasury, Ally’s stockholders include private equity firm Cerberus Capital Management, with a 9 percent stake, and GM, which owns 4 percent directly and 6 percent through a trust.

Citi, Goldman Sachs, JPMorgan, Morgan Stanley, Barclays Capital and Deutsche Bank Securities are the underwriters on the IPO.