General Motors has agreed to sell a 51% controlling interest in finance arm General Motors Acceptance Corp. (GMAC) to a consortium of investors led by Cerberus Capital Management, LP, a private investment firm, and including Citigroup and Aozora Bank.

GM expects to receive approximately $14 billion in cash from this transaction over three years with an estimated $10 billion by the time the deal is closed.

“The transaction strengthens GMAC’s ability to support GM’s automotive operations, improves GMAC’s access to cost-effective funding, provides significant liquidity to GM and allows GM to continue to participate in the profitability of GMAC over the long term through its 49% ownership stake,” the automaker said in a statement.

“GM chairman and chief executive officer Rick Wagoner said in the statement that the deal “provides significant liquidity to support our North American turnaround plan, finance future GM growth initiatives, strengthen our balance sheet and fund other corporate priorities”.

The companies expect to close the deal in the fourth quarter of 2006.

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GMAC chairman and chief executive officer Eric Feldstein, who will continue to head the company after the sale, said, “This transaction begins an exciting new chapter for GMAC that will allow us to realize our strategic vision of becoming a premier global financial services company. With improved access to cost-effective funding, we will be able to provide more competitive financing to promote GM vehicle sales and to re-establish our historic trend of profitable growth across all our business sectors.

“GMAC is now poised to move from a defensive game plan to playing offence again, which should enable us to deliver tremendous value to our shareholders.”

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 and provide GM and its dealers and customers with the same broad range of financial products and services it does today.

Employment levels are not expected to change as a result of the deal. Under the agreements, GM will have an option to acquire GMAC’s global automotive finance operations, under certain conditions, including an investment-grade rating at GM. This option is exercisable for 10 years after the closing of the deal.