The Treasury Department announced Wednesday that it is investing another $3.8 billion in GMAC, boosting its ownership of the troubled firm to 56%, from 35%.
The new investment is in response to a capital need identified by last spring's stress tests of the top 19 institutions, and continued problems related to GMAC's mortgage portfolio.
"These actions offer the best chance for GMAC to complete its overall restructuring plan and return to the private capital markets for its debt financing and capital needs in 2010," the Treasury said in a press release.
The new money is in addition to the $12.5 billion the government has already invested in GMAC.
As part of the additional assistance, the government also restructured its investment in GMAC.
Of the $3.8 billion in new capital, $2.54 billion will be in the form of trust-preferred securities and $1.25 billion will be mandatory convertible preferred stock.
The Treasury will receive warrants with an additional $127 million of trust-preferred securities and $63 million of mandatory convertible preferred stock that it will exercise immediately after closing. The Treasury also plans to convert $3 billion of its existing mandatory convertible preferred into common equity.
