The $1 billion loan is still in progress, the Treasury official said. GMAC, meanwhile, said the government’s $5 billion investment was completed Monday. The Treasury Department’s investment in the company does not mean it is “passing judgment” on whether GMAC has met the Fed’s requirements to raise additional capital, the official said. GMAC has struggled to get bondholders to convert 75 percent of their debt into equity of the company and has yet to say whether it has met its goal. The company’s goal is to reach $30 billion in capital, the majority of which would come from the debt-for-equity exchange. GMAC “intends to act quickly to resume automotive lending to a broader spectrum of customers,” the company said in a statement. The company released few details about the results of the swap, but said that the conditions of the offers had been satisfied. Separately, GMAC said Monday that it has accepted all the bonds tendered in a debt-for-equity swap that was also part of its capital-raising efforts. The analyst said that the moves could allow GMAC to pickup market share in the long term, or may even eventually spur a public offering. “GM is now on a path to become the first global carmaker to have no influence/control over a captive auto finance company - this may prove a disadvantage to GM sales or, if not, it may prompt other (original equipment manufacturers) to follow,” Patel wrote in a note to investors. ![]() JPMorgan‘s Himanshu Patel said the moves show how Treasury is taking a comprehensive look at GM’s entire business and make a bankruptcy protection filing and liquidation extremely unlikely.īut at the same time, the automaker is losing control of the financing business, which may or may not have positive results down the road. GMAC said Tuesday that it would immediately resume lending to certain customers it had previously said were too great a risk for auto loans as a result of the tight credit markets. ![]() The government aid is also expected to provide a needed boost to domestic auto sales by freeing up more credit for consumers. Treasury also said it will lend up to $1 billion to General Motors so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital. In exchange for the slice of the $700 billion bank rescue package, the government will receive preferred shares that pay an 8 percent dividend and warrants to purchase additional shares in return for the money, the department said. ![]() WASHINGTON – The Treasury Department said that it will provide $5 billion to GMAC Financial Services LLC, the ailing financing arm of General Motors Corp., in a move that’s expected to stave off a bankruptcy protection filing at the company but also severely limit GM’s control over it.
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