Business

Ally Financial is closer to paying back US

DETROIT — Ally Financial Inc., the former finance arm of General Motors that was bailed out by the US government, is selling its Canadian auto finance unit to Royal Bank of Canada for $4.1 billion.

The deal, expected to close early next year, is part of Ally’s plan to accelerate repayment of the $17.2 billion bailout, but it was unclear Tuesday exactly when the government would get more money. So far Ally has repaid $5.8 billion. The US Treasury owns 74 percent of Ally common stock plus $5.9 billion of preferred stock.

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Ally said in a statement that RBC will pay a $620 million premium over book value to buy Ally Credit Canada Limited and ResMor Trust. Book value for the third quarter was about $3.5 billion. Ally Credit Canada had about $9.4 billion in assets as of Sept. 30 and is among the largest auto financing businesses in Canada.

Ally said it is still discussing the mechanics of the repayment, which could come through an initial public stock offering or a possible buyback of the $5.9 billion in preferred shares.

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