Ally Financial turned down a demand from a hedge fund, Lion Point Capital, which wants Detroit-based Ally to form a “strategic alternatives committee” that would explore selling the company, Ally said in a written statement on Monday.
Lion Point, based in New York, also notified Ally on Monday that the hedge fund was proposing two candidates to stand for election to Ally’s board of directors at Ally’s next annual meeting, on May 3. Lion Point holds less than 1% of Ally’s stock, the auto lender said.
“Ally’s business and financial fundamentals and prospects are strong, and that it would be a highly disadvantageous time in the business, market and regulatory cycle to pursue a sale transaction,” Ally said in a written statement. “The formation of such a committee would be widely regarded as a decision to pursue a sale of the company.”
Regarding the proposed board members, Ally said, “Ally’s board of directors will carefully consider and evaluate Lion Point’s nominations and will communicate its views to stockholders in due course.”
Ally Chairman Fritz Hobbs said, “… our fundamental disagreement is with Lion Point’s clear agenda to force a sale of Ally. Such a course of action would be contrary to the best interests of stockholders and our obligations to all stockholders do not permit us to adopt such a course to avoid a proxy contest.”
Lion Point could not be reached for comment.