Ally Financial, Inc (NYSE:GKM) (NYSE:GMA), the former financing arm of General Motors Company (NYSE:GM) announced its agreement with the United States Treasury Department to repay $5.2 billion in cash to repurchase the mandatorily convertible preferred (MCP) stocks held by the government after providing bailout money during the financial crisis.

Ally Financial

Ally Financial signs an agreement with Treasury Department

In addition, Ally Financial, Inc (NYSE:GKM) (NYSE:GMA) also signed an agreement to end its existing share adjustment right with the Treasury Department by paying $725 million in cash.

According to Michael Carpenter, chief executive officer of Ally Financial, Inc (NYSE:GKM) (NYSE:GMA), the latest transactions with the U.S. Treasury are important steps for the company to repay the remaining investments by taxpayers in the country. He said, “The actions announcement today will clear the way for Ally to pursue the next steps to ultimately exit the TARP program and enable its operations to further thrive.

Carpenter also emphasized, “All has undergone a complete restructuring and transformation in recent years, from addressing its mortgage risks to further strengthening its leading automotive finance and direct banking franchises. We are encouraged by the strong investor interest in the company through the process to raise the additional common equity and believe it validates the progress that has made over recent years.”

Ally Financial, Inc (NYSE:GKM) (NYSE:GMA) already repaid the U.S. government around $6.2 billion. After the completion of the current transaction, the company will have repaid two-thirds or $12.1 billion of the $17.2 billion bailout.

Ally Financial to sell common shares

The company also revealed its plan to sell almost 167,000 common shares for a total of $1 billion to investors.

In December, last year, Ally Financial, Inc (NYSE:GKM) (NYSE:GMA) paid the government $4.5 billion. The company received $17.2 billion from the government. In return, the government gained a 74% equity stake in the company.

In November, GM Financial acquired the auto financing operations of Ally Financial, Inc (NYSE:GKM) (NYSE:GMA) in China, Europe, and Latin America for $4.25 billion. The company also sold its Canadian operations to the Royal Bank of Canada for $4.1 billion, and its Mexican insurance business for $865 million.

In May, Ally Financial, Inc (NYSE:GKM) (NYSE:GMA) agreed to pay $2 billion in support of the Chapter 11 settlement agreement of its subsidiary ResCap, which suffered losses from the collapse of the residential mortgage market. Under the agreement, All Financial will receive full repayment for its secured claims including the $1.13 billion owed under existing credit facilities. Since filing for bankruptcy, ResCap accepted a buyout offer from a unit of Ocwen Financial Corp (NYSE:OCN) for $3 billion.