ResCap gets consents needed to amend $14 billion of notes, extends early deadline

By Angela McDaniels

Tacoma, Wash., May 19 - Residential Capital, LLC (ResCap) has received enough consents from holders of its notes to amend the note indentures, according to a company news release.

ResCap has entered into supplemental indentures that will release the subsidiary guarantees of its obligations under the notes and eliminate some of the restrictive covenants and events of default in the indentures.

In addition, the company extended the early delivery deadline to 5 p.m. ET on May 21 from May 16.

As previously reported, ResCap began the consent solicitations and exchange offers for $12.8 billion of its outstanding notes on May 5.

On that same date, the company began a cash tender offer and consent solicitation for all its $1.2 billion outstanding principal amount of floating-rate notes due June 9, 2008.

Plans for the offers were first announced on May 2.

The exchange offers apply 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.

They also apply 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.

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.

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 payable at maturity.

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

Due to the amendments, claims for all new notes issued in the exchange offers will be effectively senior to claims for unexchanged old notes to the extent of the value of all assets of the subsidiary guarantors as well as the collateral securing the new notes, the company noted in the release.

For each $1,000 principal amount of notes due 2008 tendered by the early tender 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 for each $1,000 principal amount of old notes.

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

The exchange offers are slated to expire at 11:59 p.m. ET on June 3.

Dutch auction

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

Each holder that chooses to receive cash must 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.

June 2008 notes tender

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

Notes tendered after that deadline but before the tender expiration will receive $970 per $1,000 principal amount.

Holders will also receive accrued interest for the notes due June 2008.

Settlement of the exchange and tender offers depends on conditions that include ResCap obtaining a new first-lien senior secured credit facility of at least $3.5 billion. ResCap said it is in negotiations with parent GMAC LLC for such a facility.

Global Bondholder Services 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.

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