GMAC further extends early deadline in exchange, tender offers after participation picks up

By Angela McDaniels

Tacoma, Wash., Dec. 17 - GMAC LLC said it has received a significant amount of additional tenders in its previously announced exchange offers and tender offers and has extended the early delivery time in response to requests from investors.

The early delivery time is now 5 p.m. ET on Dec. 19 instead of Dec. 16, and the offer will expire at 11:59 p.m. ET on Dec. 26.

The exchange offers and tender offers for 33 series of outstanding GMAC and Residential Capital, LLC debt securities totaling $38 billion began on Nov. 20. The early delivery date was originally scheduled for Dec. 4 and has been extended five times. The original offer expiration was Dec. 18 and has been extended once.

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.

As previously reported, GMAC increased the dividend on the preferreds to 9% from 5% after reaching an agreement in principle with representatives of a group of noteholders.

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.

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

On Wednesday, GMAC said it has been informed by numerous securities custodians that additional instructions to tender notes remain in the process of being submitted. Based on notes received and processed through Wednesday, about $16.6 billion, or 58%, of the outstanding GMAC notes and about $3.5 billion, or 37%, of the ResCap notes have been tendered.

As of Dec. 10, $6.3 billion GMAC notes and $2.0 billion ResCap notes had been tendered.

The company said the amount of notes tendered represents substantial progress toward attaining the minimum amount of regulatory capital needed for GMAC to become a bank holding company, 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.

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

GMAC is a Detroit-based diversified financial services company.

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