(By Balachander) General Motors Co. (NYSE:GM) disclosed that its GM Financial unit has made a bid for international operations that auto lender Ally Financial Inc. plans to sell.
The Detroit, Michigan-based auto giant said GM Financial and a number of other third parties submitted bids in July.
Ally, which is 74 percent owned by the U.S. government through multiple bailouts, had in May launched a process to explore strategic alternatives for its international operations, in a move to accelerate repayment of the U.S. Treasury's investment in the company.
The U.S. auto lender was the former financing arm of GM before private equity firm Cerberus Capital Management bought a majority stake in 2006.
Ally expects the sales to allow it to return a total of two-thirds of the government's investment in the company by year-end. Ally has paid roughly $5.5 billion to the U.S. Treasury.
There is no assurance that GM Financial will be successful in acquiring any of Ally Financial's international operations, GM said.
"However, if GM Financial is successful in completing a transaction, it could expand its operations materially in international markets. Such expansion could have significant impacts on its business, results of operations, liquidity and financial condition," according to GM's filing with the U.S. regulators.
If GM Financial is the successful bidder, its consolidated assets could potentially more than double, and it could incur substantial amounts of indebtedness, including secured debt, GM said in a filing with the Securities and Exchange Commission.
"Depending on the scale of the operations GM Financial may acquire and the amount of equity that it invests in such a transaction or transactions, its consolidated debt and other liabilities could potentially more than double and its ratio of adjusted assets (giving effect to the transaction or transactions) to adjusted equity (excluding goodwill) could potentially more than double as well."
Ally's global operations include auto finance, insurance, and banking and deposit operations in Canada, Mexico, Europe, the U.K. and South America.
GM shares shed 0.19 percent to trade at $20.50 on Monday.