Struggling GM to Gain $14Bln for Finance Arm

DETROIT -- General Motors, which is struggling to turn around its North American automaking operations, announced Monday that it had reached an agreement to sell a 51 percent stake in its finance arm.

GM said it expected to receive about $14 billion from the sale of General Motors Acceptance Corp. over the next three years.

The stake is being purchased by a consortium of investors led by Cerberus Capital Management., a private investment firm. The group also includes Citigroup and Aozora Bank.

GM will receive $7.4 billion from the consortium and an estimated $2.7 billion cash distribution from GMAC related to the conversion of most of GMAC and its U.S. subsidiaries into limited liability companies.

In addition, GM will retain about $20 billion of GMAC automotive lease and retail assets and associated funding with an estimated net book value of $4 billion that will monetize over three years.

GM chairman and chief executive Rick Wagoner said the sale was an important part of efforts to restore the world's biggest automaker to profitability.

"This agreement is another important milestone in the turnaround of General Motors. It creates a stronger GMAC while preserving the mutually beneficial relationship between GM and GMAC," Wagoner said in a statement.

The deal came amid speculation Wagoner's future was in doubt.

GM, which lost $10.6 billion in 2005 and is losing market share to Asian competitors, is facing a stike at its main supplier, Delphi, go on strike.