Posted on 15 Dec 2008
The lawyer for GMAC LLC says that investors holding about $10.5 billion of bonds agreed to revised terms of a debt swap designed to help the auto and home lender get financial aid from federal banking programs.
“The committee has unanimously agreed to support the offer,” said Andrew Rosenberg, partner at Weiss, Rifkind, Wharton & Garrison LLP, in an interview from his New York office. Rosenberg represents bondholders who had balked at the Detroit- based company’s plan to restructure its debt, which was designed to help avert a default.
GMAC, the primary lender to General Motors Corp. dealers, said Dec. 12 it revised the terms of its $38 billion debt exchange offer, including an improved interest rate and a capital contribution by its owners. The swap would pave the way for GMAC to convert to a bank holding company and gain access to U.S. subsidies for ailing financial companies. GMAC extended the early deadline for the exchange to Dec. 16, its fourth extension since announcing the proposal last month.
“It was the best deal that could be achieved that would allow the company to hopefully become a bank holding company, which the committee believes is in the best interest of noteholders,” Rosenberg said.
Rosenberg said he is in contact with holders of about another $8 billion in GMAC debt and is relaying the committee’s decision. The group’s acceptance may push GMAC closer to its goal of 75 percent participation needed to complete its rescue plan. The $38 billion debt swap includes notes issued by the Residential Capital LLC mortgage unit.