Residential Capital seeks loan waiver of net worth requirement

By Sara Rosenberg

New York, Jan. 31 - Residential Capital LLC is looking for a waiver from its credit facility lenders as a result of a temporary breach of the $250 million consolidated tangible net worth covenant, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The non-compliance occurred, because the company recorded a charge regarding penalties from foreclosure related matters at the parent company Ally Financial Inc.

To fix the situation, Ally contributed about $196.5 million of capital to Residential Capital through forgiveness of intercompany debt, bringing pro forma tangible net worth to $300 million.

However, the company still needs a waiver from its lenders, which it said it expects to receive.

Residential Capital is a New York-based real estate finance company. Ally is a Detroit-based automotive lender.

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