GMAC amends, extends exchange and tender offers after reaching initial agreement with some noteholders

By Angela McDaniels

Tacoma, Wash., Dec. 15 - GMAC LLC said it increased the dividend to 9% from 5% on the perpetual senior preferred stock to be issued under the private exchange and tender offers for some of its debt securities and some Residential Capital, LLC debt securities.

The dividend will be reduced to 7% if GMAC raises at least $2 billion of new tier 1 capital, $750 million of which will be contributed by existing shareholders, according to a company news release.

The offers were also amended to add some covenants relating to the new guaranteed notes, including restrictions on liens, subsidiary guarantees and asset sales.

In connection with the changes, the early delivery time was extended to 5 p.m. ET on Dec. 16 from Dec. 12 and the offers were extended to 11:59 p.m. ET on Dec. 26 from Dec. 18.

GMAC said it amended the offers in order to reflect an agreement in principle reached with representatives of a substantial portion of the outstanding notes.

The amount of notes covered by the agreement in principle represents substantial progress toward attaining the minimum amount of regulatory capital needed for GMAC to become a bank holding company, the company said, but significant additional participation will also be required.

GMAC needs to achieve at least $30 billion of total regulatory capital to meet the Federal Reserve's requirements for it to become a bank holding company, and it needs roughly 75% participation in the offers in order to meet this condition.

Previously, the company said it plans to withdraw its application to become a bank holding company if it does not receive the needed amount of notes and that if it is unable to successfully convert to a bank holding company and complete the offers by Dec. 31, it would have a near-term material adverse effect on GMAC's business, results of operations and financial position.

The exchange offers and tender offers for 33 series of outstanding GMAC and ResCap debt securities totaling $38 billion began on Nov. 20. The early delivery date was originally scheduled for Dec. 4 and has been extended four times.

Roughly $6.8 billion, or 24%, of the outstanding GMAC notes and about $2.4 billion, or 25%, of the outstanding ResCap notes have been tendered to date. As of Dec. 10, $6.3 billion GMAC notes and $2.0 billion ResCap notes had been tendered.

GMAC said the notes tendered to date do not include the notes covered by the agreement in principle.

In the offers, GMAC is offering to purchase and/or exchange any and all of the 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 9% perpetual senior preferred stock with a liquidation preference of $1,000 per share of a wholly owned subsidiary of GMAC; or (b) cash.

Global Bondholder Services Corp. (866 794-2200) is the information agent.

GMAC is a Detroit-based diversified financial services company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.