GMAC May Back Off Bank Application, Die Alone

Edward Niedermeyer
by Edward Niedermeyer
gmac may back off bank application die alone

In an SEC filing today, GMAC Financial Services warns that it may back away from its bank holding company status application, due to its inability to refinance some $38b in debt. That bank holding company status would make GMAC eligible for TARP funds, but without a federal rescue many see GMAC heading for bankruptcy court says Automotive News [sub]. Including GMAC. The Cerberus-owned finance firm warned that if it doesn’t receive holding company status by December 31, “it would have a near-term material adverse effect on GMAC’s business, results of operations and financial position.” Meaning it will be forced to sell of more assets (with no buyers lining up) and miss 2009 debt payments. To meet the Fed’s requirement, GMAC said it needs about 75 percent participation in its debt-swap offer. So far, participation is just over 20 percent. The good news? If you’ve got $20b or so rattling around and you want in, GMAC has extended its debt-swap deadline until December 12. Deep Throat breaks down the bad news thusly: “GM would have to write down its investment in GMAC likely to zero. The big problem is the floorplan issue for dealers. There are few replacement lenders right now, and those that will step up will offer harsher terms, curtailments, etc. That means less ability for GM to stockpile cars at dealer lots. OTOH, it’s possible that other captives, like Toyota’s finance arm, could seize an opportunity to play… especially if a GM dealer is also a Toyota dealer. But again, terms will be critical, and depends how much exposure these guys want and how much capacity they have. What’s interesting is that the bonds trade high with only 10-15% discounts from par. This is due to the recovery from finance assets being much better than from manufacturing assets.”

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  • Jolo Jolo on Dec 10, 2008

    Rumor has it (from CNN (towards the end of the video): that if GMAC goes under, ~5000 GM dealerships also go under. This could turn out to be a good thing for GM...

  • Tedward Tedward on Dec 10, 2008

    Jolo: That's very very interesting although (and I really don't know the answer to this one, not a finance guy), would the franchise agreement transfer to a new owner out of bankruptcy liguidation, or would it just be a sale of hard assets? Or, is there contract language that realistically allows GM to opt out of renewing the agreement in the even of an owner change or a liquidation? I certainly hope so. Depending on which dealers go under (and if they stay dead), this could be interesting. I wonder what GM (or really, any truly large interest) could do with ownership of a significant percentage of their dealers? This could allow an opportunity for GM to reinvent it's brand's service image and customer experience. I'd bet there's some legal restrictions o GM's ability to compete with it's own dealers at some level though.

  • KOKing That base hybrid system must be something other than the normal Toyota Hybrid Synergy Drive, since that uses the two electric motors as the ('CVT') transmission without a separate transmission of any kind.
  • Analoggrotto Too much of the exterior is shared with the Grand Highlander. Toyota/Lexus is clearly over extended here as this was rushed in direct response to the Kia Telluride which has decimated RX sales. Lexus was not such a major offender of just changing the front and rear end caps on a lesser Toyota model (this worked for LX / Land Cruiser as the latter is already expensive) but for such a mass market vehicle, buyers will notice and may just go to Toyota (or Kia) for their big SUV.
  • Crtfour I'm a BOF SUV fan. In my opinion it's certainly not a looker (but what is these days). But it does look the part and should be great off road. Plus kudos to Toyota for retaining actual shift levers. So I give it a thumbs up.
  • Theflyersfan UX Hybrid, NX, NX Hybrid, NX Plug-In Hybrid EV, RZ, RX, RX Hybrid, RX 500h, GX, LX, and now the TX. (source: the bloated section of the Lexus SUV site) It's looking like the Taco Bell menu over there - the same dozen ingredients mixed around to make a lineup. I'm waiting for something like the WX to compete with the Chevy Trax and maybe the LXXXL to compete with the Hummer EV and maybe a four row crossover in 2025 and a lower-cased line like the rx or nx to compete with the German CUV-"coupes" and their slashed tops and cargo areas. C'mon Lexus, there are more micro-niches to be filled! Gather your boardroom committees together and come up with another plan! And careless parent alert: shouldn't that kid be in a booster seat? I mean in my age, we sat in the way back of station wagons on the flat floor and bounced around with every curve, but these days you gotta deck your kid out in 50 pounds of pads and bubble wrap before they leave the driveway, so get that child seat in the way back right now!
  • 28-Cars-Later Nice minivan, just add the sliding doors and quit living in denial.