initial public offerings (IPOs) trading on American exchanges

Monday, June 6, 2011

5% of IPO Shares Offered by Ally’s Financial to Auto Dealers

Ally Financial Inc had reported that it plans to propose up to 5% of the common shares from its initial public offering to its customers, as the auto lender revealed more explanation of its IPO. This move allows Ally’s primary customers, the auto dealers, to access the auto lender’s public stock offering anticipated this summer.

Ally’s main business is to offer financing to traders, serving them to put new vehicles on their lots.
Ally commented in its modified IPO prospectus, filing Friday with the US Securities and Exchange Commission that any shares left over from this 5% stock will be presented to the general public.

An Ally spokeswoman, Gina Proia, refused to comment on the probable size or timing of the stock offering, but people related to the agreement told in the beginning of this year that the plan is for the US Treasury to trade about $5 billion of common stock in the offering. If markets trend is optimistic, Ally’s shares should start trading before the end of June.

In May, Ally reported in an earlier adjusted IPO prospectus filing with the SEC, that the US Treasury Department, which owns 74% of Ally, had plans to switch $2.9 billion of its existing holding of $5.9 billion of compulsory convertible preferred securities into common stock.

US Treasury will replace the remaining $3 billion of its compulsory convertible preferred securities into so-called tangible equity units which is a security with a debt and equity factor. The Treasury will propose a part of these tangible equity units along with the common equity proposal.

Ally has listed Citigroup Inc. (NYSE:C), Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Morgan Stanley (NYSE:MS) as its top underwriters, but other banks are predicted to be added to the list.

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