Ally Bank 2011 Annual Report Download - page 185

Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10−K
earnings multiples from comparable publicly traded companies deemed similar to Ally (and its operating segments) and by observing comparable
transactions in the marketplace. We also considered the implied valuation of our common stock based on the December 30, 2010, conversion with Treasury.
In connection with the conversion, the New MCP Certificate of Designation was amended to require us to deliver additional shares to the New MCP
holders upon occurrence of certain specified events. The fair value associated with this provision was $30 million and was reflected in the New MCP
balance at December 31, 2010. The fair value of the provision was determined utilizing an option pricing model using inputs and assumptions that
management believes a willing market participant would use in estimating fair value (a Level 3 fair value input).
As a result, Treasury now holds 118,750,000 shares of the New MCP, with a total liquidation preference of $5.9 billion. Dividends of the New MCP
accrue at 9% per annum. Dividends are payable quarterly, in arrears, only if and when declared by Ally's Board of Directors. The New MCP generally is
nonvoting, other than class−voting on certain matters under certain circumstances, including generally, the authorization of senior capital stock, the adverse
amendment of the New MCP, and any exchange or reclassification involving the New MCP or merger or consolidation of Ally. Upon conversion of the
New MCP into Ally common stock, the holder would have the voting rights associated with the common stock.
The shares of the New MCP are convertible into common stock at the applicable conversion rate (as provided in the Certificate of Designation) either:
(i) at Ally's option, at any time or from time to time, with the prior approval of the Federal Reserve provided that Ally is not permitted to convert any shares
of the New MCP held by Treasury except (a) with the prior written consent of Treasury (which consent may be granted in the sole discretion of Treasury
with respect to each conversion considering such factors as it deems appropriate at such time, which may include seeking to condition the terms on which it
may provide such consent, which may include seeking an alteration of the conversion rate) or (b) pursuant to an order of the Federal Reserve compelling
such a conversion; or (ii) at the option of the holder, upon the occurrence of certain specified transactions. All shares of the New MCP that remain
outstanding on December 30, 2016, will automatically convert into common stock at a conversion rate of 0.00432 common shares per share of the
New MCP. Under any conversion of the New MCP, settlement will always occur by issuance of our common stock.
Subject to the approval of the Federal Reserve and the restrictions imposed by the terms of our other preferred stock, we may opt to redeem, in whole
or in part, from time to time, the New MCP then outstanding at any time. On or before December 30, 2011, the New MCP may be redeemed at the
liquidation preference, plus any accrued and unpaid dividends. After December 30, 2011, the New MCP may be redeemed at the greater of the liquidation
preference, plus any accrued and unpaid dividends or the as−converted value, as defined in the Certificate of Designation.
Subject to certain exceptions, for so long as any shares of the New MCP are outstanding and owned by Treasury, Ally is generally prohibited from
paying certain dividends or distributions on, or redeeming, repurchasing, or acquiring its capital stock or other equity securities without the consent of
Treasury. Additionally, Ally is generally prohibited from making any dividends or distributions on, or redeeming, repurchasing, or acquiring its capital
stock or other equity securities unless all accrued and unpaid dividends for all past dividend periods on the New MCP are fully paid.
The following table summarizes information about the New MCP.
December 31, 2011 2010
Series F−2 preferred stock (a)
Carrying value ($ in millions) $ 5,685 $ 5,685
Par value (per share) $ 0.01 $ 0.01
Liquidation preference (per share) $ 50 $ 50
Number of shares authorized 228,750,000 228,750,000
Number of shares issued and outstanding 118,750,000 118,750,000
Dividend/coupon Fixed 9%
Redemption/call feature Perpetual (b)
(a) Mandatorily convertible to common equity on December 30, 2016.
(b) Convertible prior to mandatory conversion date with consent of Treasury.
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