GMAC files application to become bank holding company, tenders for $38 billion of securities

By Jennifer Chiou

New York, Nov. 20 - GMAC LLC announced that it has submitted an application to the U.S. Federal Reserve Board of Governors for approval to become a bank holding company and also said it began private exchange offers and cash tender offers for $38 billion of some outstanding GMAC and Residential Capital, LLC debt securities to increase capital.

GMAC also announced that it has submitted an application to the U.S. Treasury to participate in the capital purchase program created under the Emergency Economic Stabilization Act of 2008, which is conditional upon becoming a bank holding company.

In the offers, GMAC is offering to purchase and/or exchange any and all of several notes series for, at the election of each eligible holder, either (a) new securities, consisting of (i) a combination of newly issued senior guaranteed notes for the old GMAC notes maturing prior to 2031 or a combination of new guaranteed notes and newly issued 8% subordinated notes due 2018 for old GMAC notes due 2031, and (ii) newly issued 5% perpetual senior preferred stock with a liquidation preference of $1,000 per share of a wholly owned subsidiary of GMAC; or (b) cash.

Affected GMAC securities include the:

• €750 million of Euribor plus 125 basis points notes due 2009, which have a cash election of $850 or $850 of new senior guaranteed notes and a preferred stock preference of $150;

• €1.25 billion of 4¾% notes due 2009, which have a cash election of $830 or $850 of new senior guaranteed notes and a preferred stock preference of $150;

• $250 million of 6½% notes due 2009, which have a cash election of $765 or $850 of new senior guaranteed notes and a preferred stock preference of $150;

• $2.4 billion of 7¾% notes due 2010, which have a cash election of $815 or $850 of new senior guaranteed notes and a preferred stock preference of $150;

• €500 million of 5¾% notes due 2010, which have a cash election of $720 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• €1 billion of 5¾% notes due 2010, which have a cash election of $650 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• £200 million of 6 5/8% notes due 2010, which have a cash election of $600 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $2 billion of 7¼% notes due 2011, which have a cash election of $700 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $400 million of 6% notes due 2011, which have a cash election of $650 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• €1.5 billion of 5 3/8% notes due 2011, which have a cash election of $580 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $5.45 billion of 6 7/8% notes due 2011, which have a cash election of $650 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $1 billion of 6% notes due 2011, which have a cash election of $630 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $1 billion of 7% notes due 2012, which have a cash election of $630 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $1 billion of 6 5/8% notes due 2012, which have a cash election of $620 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• €300 million of 6% notes due 2012, which have a cash election of $600 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $2 billion of 6 7/8% notes due 2012, which have a cash election of $620 or $825 of new senior guaranteed notes and a preferred stock preference of $175;

• $1.75 billion of 6¾% notes due 2014, which have a cash election of $590 or $800 of new senior guaranteed notes and a preferred stock preference of $200;

• $593.72 million of Libor plus 220 bps notes, which have a cash election of $550 or $800 of new senior notes and a preferred stock preference of $200; and

• $3.97 billion of 8% notes due 2031, which have a cash election of $600 or $500 of new senior notes and $350 of new subordinated notes and a preferred stock preference of $150.

Affected ResCap securities include the:

• $62.55 million of Libor plus 310 bps notes due April 17, 2009, which are exchangeable for $300 of new senior notes and $250 of new subordinated notes. These notes have no cash election option;

• $205.45 million of Libor plus 383 bps notes due April 17, 2009, which are exchangeable for $300 of new senior notes and $250 of new subordinated notes. These notes have no cash election option;

• $131.6 million of Libor plus 310 bps notes due May 22, 2009, which are exchangeable for $300 of new senior notes and $250 of new subordinated notes. These notes have no cash election option;

• $1.57 billion of 8½% notes due May 15, 2010, which have a cash election of $500 or $750 of new senior notes;

• $1.25 billion of 8 3/8% notes due June 30, 2010, which have a cash election of $220 or $200 of new senior notes and $300 of new subordinated notes;

• €360.99 million of Euribor plus 345 bps notes due Sept. 27, 2010, which have a cash election of $210 or $200 of new senior notes and $300 of new subordinated notes;

• $217.8 million of 8% notes due Feb. 22, 2011, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes;

• €110.9 million of 7 1/8% notes due May 17, 2012, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes;

• $94.97 million of 8½% notes due June 1, 2012, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes;

• $874.83 million of 8½% notes due April 17, 2013, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes;

• £40.75 million of 8 3/8% notes due May 17, 2013, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes;

• £65.27 million of 9 7/8% notes due July 1, 2014, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes;

• $4.01 billion of 9 5/8% notes due May 15, 2015, which have a cash election of $250 or $250 of new senior notes and $300 of new subordinated notes; and

• $150.96 million of 8 7/8% notes due June 30, 2015, which have a cash election of $200 or $150 of new senior notes and $350 of new subordinated notes.

The offers will end at 11:59 p.m. ET on Dec. 18.

As a bank holding company, GMAC said it would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses.

GMAC said it also expects to have expanded opportunities for funding and for access to capital as a bank holding company.

If GMAC's application to become a bank holding company is accepted, GMAC Bank will become a Utah chartered Federal Reserve member bank.

Global Bondholder Services Corp. is the information agent for the offers (866 794-2200 or call collect 212 430-3774).

ResCap is a New York-based real estate finance company primarily focused on residential real estate markets in the United States, Canada, Europe, Latin America and Australia.

Detroit-based GMAC is a financial services company.

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