General Motors Corp. has completed the sale of its stake in its GMAC finance unit in a deal that will give the troubled automaker a much-needed $14-billion US shot in the arm.

The deal, announced Thursday, ends a six-month odyssey that began when the giant automaker said it had a tentative deal to sell its 51-per-cent stake in General Motors Acceptance Corp. to a consortium of investors led by Cerberus Capital Management, a private holding company that includes Citigroup Inc.

GM three-month trading

"This transaction will result in a stronger GMAC, with enhanced access to funding at lower costs and greater opportunities for growth, including leveraging their traditionally strong relationships with GM dealers," Rick Wagoner, GM's chairman and chief executive officer, said Thursday.

GM will get the $14 billion over the next three years, including the purchase price of $7.4 billion, a GMAC distribution of $2.7 billion and loan repayments worth about $4 billion.

The automaker plans to use the proceeds of the sale to pay down some of its restructuring costs as it updates its product line, shuts assembly plans and buys out its employees.

Kerkorian sells 14M shares

GM also announced Thursday that dissident investor Kirk Kerkorian and his Tracinda Corp. is selling another 14 million of his GM shares, dropping his stake by a third, to 4.95 per cent.

That sale will close on Friday, giving him proceeds of about $400 million.

The GMAC deal gives a crucial vote of confidence to GM chairman and CEO Richard Wagoner, who has been weathering strong criticism in recent months.
(Coke Whitworth/Associated Press)

It was the second block of stock that Kerkorian has sold in the past week, lowering his holding from 9.9 per cent.

Tracinda has been pulling away from GM since its decision to pull out of an alliance with Renault SA of France and Nissan Motor Corp. of Japan. The three companies began discussing a potential three-way alliance after public prodding by Tracinda.

Tracinda said at the time that it had "grave reservations" about GM's abilities to compete against Asian automakers without the help of the other automakers.

Vote of confidence for Wagoner

The GMAC deal gives a crucial vote of confidence to Wagoner, who has come under strong criticism in recent months for his handling of a company that lost $10.6 billion US last year, that has steadily lost market share and may, some say, be close to bankruptcy because of its huge operating losses and retiree health-care costs.

"While there is still much work to be done, the GM board has great confidence in Rick Wagoner, his management team and the plan they are implementing to restore the company to profitability," said George Fisher, the presiding director of GM's board.

GM's share price fell 27 cents to close at $29.23 US on the New York Stock Exchange Thursday.

With files from the Associated Press