US Treasury throws 6-billion-dollar lifeline to GMAC

WASHINGTON – The US Treasury unveiled a six-billion-dollar package to assist GMAC, the troubled financial arm of General Motors.

The Treasury said in a statement it would purchase 5 billion dollars in senior preferred equity with an eight percent dividend from GMAC, which is also partially owned by Chrysler parent company Cerberus, and make a one-billion-dollar loan to General Motors.

In exchange, Treasury would receive warrants from GMAC in the form of additional preferred equity equal to 5 percent of the preferred stock purchase and would be paid a 9 percent dividend if used.

The move boosts GM's prospects after the US government approved a 13.4-billion-dollar rescue loan package in early December for GM and Chrysler to stave off collapse amid tight credit and dismal sales.

GM would receive an additional 4 billion dollars from February pending congressional approval.

(Agencies)