ResCap to launch exchange offers, cash tender for $14 billion of notes

By Laura Lutz

Des Moines, May 2 - Residential Capital, LLC (ResCap) said that it plans to conduct exchange offers and consent solicitations for all of its $12.8 billion of outstanding notes for newly issued notes.

In addition, ResCap said it plans to conduct a cash tender offer and consent solicitation for all of its $1.2 billion outstanding principal amount of floating-rate notes due June 9, 2008.

ResCap is offering to issue 8½% senior secured guaranteed notes due 2010 in exchange for old notes maturing in 2008 and 2009 and 9 5/8% junior secured guaranteed notes due 2015 for old notes maturing in 2010 through 2015.

The offer applies to $398.85 million of floating-rate notes due 2008, $684.01 million of 8 1/8% notes due 2008, $714 million of floating-rate notes due April 2009, $949 million of floating-rate notes due May 2009 and $576.96 million of floating-rate subordinated notes due 2009.

It also applies to $2.15 billion of 8 3/8% notes due 2010, €542.8 million of floating-rate notes due 2010, $1.24 billion of 8% notes due 2011, €550 million of 7 1/8% notes due 2012, $928.5 million of 8½% notes due 2012, $1.6 billion of 8½% notes due 2013, £348.92 million of 8 3/8% notes due 2013, £363 million of 9 7/8% notes due 2014 and $486.5 million of 8 7/8% notes due 2015.

For each $1,000 principal amount of notes due 2008 tendered by an early deadline, holders will receive $1,000 principal amount of new notes.

For each $1,000 principal amount of notes due April 2009 or May 2009 tendered by the early deadline, holders will receive $900 principal amount of new notes.

For each of the other series, holders will receive $800 principal amount of new notes for each $1,000 principal amount of notes tendered by the early deadline.

For notes tendered after the early deadline, the principal amount of new notes will be decreased by $30.00 for each $1,000 principal amount of old notes.

Holders of tendered notes will receive accrued interest to but excluding the settlement date.

Holders may opt for Dutch auction

Participating holders may also choose to receive cash instead of the new notes through a modified Dutch auction process.

Each holder that chooses to receive cash will submit a minimum price that the holder wants to receive for the old notes. For each $1,000 principal amount, the offered prices must be at least $850 for notes maturing in 2008 and 2009 and at least $650 for notes maturing in 2010 through 2015. The offered prices may not be more than $1,000 per $1,000 principal amount of any of the old notes.

Holders will receive new notes in exchange for old notes that are submitted but not accepted in the auction process.

The offers are expected to begin early the week of May 5.

One third of the original principal amount of the 9 5/8% new notes will be mandatorily redeemable on each of May 15, 2013 and May 15, 2014. The rest will be paid at maturity.

The new notes will be guaranteed by subsidiaries of ResCap and secured by a security interest in ResCap's assets.

Tender planned for notes due June 2008

ResCap is offering to pay $1,000 for each $1,000 principal amount of its floating-rate notes due June 9, 2008 that are tendered by the early deadline.

Notes tendered after the early deadline will receive $970 per $1,000 principal amount.

Consents sought to amend notes

In connection will all of the offers, ResCap plans to solicit consents for to amend the indentures for the old notes.

The proposed amendments would release the subsidiary guarantees of ResCap's obligations under the old notes. They would also eliminate some of the restrictive covenants and events of default.

Issuance of the new notes would not require approval of the amendments, so the exchange offers would not depend on the outcome of the consent solicitations.

Settlement of the offers would depend on other conditions, including ResCap's entering into a new first lien senior secured credit facility providing for at least $3.5 billion. ResCap said it is currently in negotiations with parent GMAC LLC for such a facility.

Global Bondholder Service Corp. (866 470-3800 or 212 925-1630) is the information agent.

ResCap is the Minneapolis-based mortgage lending unit of General Motors Acceptance Corp. (GMAC).

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