The board of General Motors expressed “great confidence” on Monday in chief executive Rick Wagoner after approving the sale he engineered of a controlling stake in the auto maker’s profitable financing arm GMAC.

“This transaction along with the other progress GM has been making on its turnaround plan, is an important milestone,” the board’s presiding director George Fisher said, according to Dow Jones.

“While there is still much work to be done, the GM board has great confidence in Rick Wagoner, his management team and the plan they are implementing to restore the company to profitability.”

The news agency noted that Fisher, one-time head of Eastman Kodak, is one of the longest-standing officials on GM’s 12-member board and head of the corporate governance committee.

Speculation has been building that Wagoner could be on the hot seat following the company’s massive $US10.6 billion loss in 2005 and the revelation of new probes into the company’s accounting, Dow Jones added.

Burnham Securities auto analyst David Healy told the news agency he sees “a lot of positive surprises” in the GMAC announcement, including $14 billion in total cash eventually streaming to GM.

Healy told Dow Jones it’s also positive that Citigroup has agreed to provide $25 billion in a syndicated loan to support GMAC’s ongoing business and its “already strong” liquidity position. GM also retains $20 billion in auto lease and retail assets, which will inevitably wind down over time, but will allow the company to maintain those revenues.

But not all analysts were impressed, according to the report.

“We believe GM deciding to cede control of this strategic business reveals how perilous GM’s situation has become,” Deutsche Bank Securities auto analyst Rod Lache reportedly said in a note to investors.

“We remain concerned that the sale of this business could wind up being another strategic error,” he said.

The ultimate success of the deal hinges on whether GMAC can climb back to investment-grade status in the credit community, and initial indications suggest the quest will not be smooth sailing, Dow Jones noted.