Breaking News: GM Sells Finance Arm for $14 Billion
DETROIT — General Motors CEO Rick Wagoner said a $14 billion deal to sell 51 percent of General Motors Acceptance Corp., widely considered the beleaguered company's cash cow, will help drive its turnaround plan in North America.
The long-awaited sale of the financing subsidiary to a consortium, led by hedge fund Cerberus Capital Management LP, was announced Monday. The group also includes Citigroup and Japan's Aozora Bank. GM will keep GMAC's lease and retail assets as part of the deal.
Wagoner said the GMAC sale is an important ingredient in the efforts to restore GM to profitability as it pays massive amounts in buyouts to reduce future labor costs. GM, which reported a $10.6 billion loss in 2005, expects to receive the $14 billion in cash from the transaction over three years.
What this means to you: The bigger question is: What does the automaker do when this $14 billion is gone? Will its manufacturing operations be profitable by then?
__________________
Source: 
Edmunds-Inside Line
Monday, April 3, 2006