Ally Financial has approval from the Federal Reserve to redeem 1,288,301 shares of its Fixed Rate Cumulative Perpetual Preferred Stock or Series G Preferred Shares at $1,000 per share plus all accrued and unpaid dividends for a total of $1,005.64 per share. The redemption date is 14 December 2015. This removes the restriction on Ally of offering common equity distributions. Ally’s stated objective is to pay a dividend and start a share repurchase program in 2016.
The U.S. Department of the Treasury sold its remaining 54.9 million shares of Ally common stock at $23.25 per share one year ago. As a result, Ally exited the Troubled Asset Relief Program (TARP). Treasury received $19.6 billion in total on the $17.2 billion Ally investment, which is $2.4 billion more than originally invested.
“The elimination of all remaining Series G Preferred Shares will decrease our preferred dividend burden and allow the company to optimize future capital management to drive shareholder value,” said Chief Executive Officer Jeffrey Brown.
The terms of the Series G Preferred Shares, which were developed during the financial crisis, prohibited the company from offering a dividend on common equity shares. In April 2015, Ally redeemed approximately $1.3 billion of its Series G Preferred Shares.