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DETROIT-Calling the deal "just what the doctor ordered," GM executives this morning announced they have agreed to sell a 51% controlling interest in General Motors Acceptance Corp. (GMAC) to a group of investors. GM officials are expecting to receive approximately $14 billion in cash throughout three years, including distributions from GMAC, with an estimated $10 billion by closing.

In a special meeting Sunday, the GM board of directors approved the sale to the investment group, which is led by New York City-based Cerberus Capital Management, LP, a private investment firm, and includes Citigroup Inc. and Aozora Bank Ltd. Speaking for the GM board, presiding director George Fisher says that despite much work that still needs to be completed, "the GM board has great confidence in Rick Wagoner, his management team and the plan they are implementing to restore the company to profitability."

Wagoner, GM chairman and chief executive officer, says the transaction is an "important milestone" in the company's turnaround strategy. Throughout the past nine months, the heavy-weight auto company has been implementing its North American restructuring plan, including a $545 million investment in Michigan manufacturing facilities, and a $7 billion cost-cutting measure that entailed the closure of 12 plants.

As part of the transaction, GM and GMAC will enter into a number of 10-year agreements under which GMAC will continue to support GM's automotive operations.The $14 billion in cash that GM is to receive includes $7.4 billion from the Cerberus-led consortium at closing and an estimated $2.7 billion cash distribution from GMAC related to the conversion of most of GMAC and its US subsidiaries to LLCs. GM will retain about $20 billion of GMAC automotive lease and retail assets and associated funding with an estimated value of $4 billion that will monetize during three years.

GM and the consortium will invest $1.9 billion of cash in new GMAC preferred equity -- $1.4 billion to be issued to GM and $500 million to the Cerberus consortium. GM also will continue to receive its 49% share of common dividends and other value generated by GMAC. Additionally, Citigroup is arranging two syndicated asset-based funding facilities totaling $25 billion, which will support GMAC's ongoing business. Citigroup has committed $12.5 billion in the aggregate to these two facilities.

The GMAC newly established board of directors will have 13 members--six appointed by the consortium; four appointed by GM; and three independent members. GMAC will continue to be managed by its existing executive management. At press time, GM shares were down 21 cents trading at $21.06.

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