GMAC fails to meet bank holding company requirements

The mortgage and auto lender has extended the deadline of its tender offers as a last ditch effort to meet the capital requirement of $30bn.

Cerberus Capital Management portfolio company GMAC Financial Services has been unable to meet the regulatory capital requirement of $30 billion necessary for approval of its application for bank holding company status.

The company last month launched private exchange offers and cash tenders for $38 billion of outstanding GMAC and ResCap debt. GMAC had announced its intention to restructure its debt and attempt to become a bank holding company on 30 October.

The deadline for the offer has been extended three days until the end of this week.

In order to reach the minimum capital requirements for bank holding company status, GMAC requires roughly 75 percent participation in its offers.

To date, only 22 percent of GMAC notes and 21 percent of ResCap notes have been tendered totalling $8.3 billion in aggregate.

“As a practical matter, GMAC does not believe it has the ability to make further changes to the GMAC and ResCap offers following the new deadline,” GMAC said in a statement.

If the requisite participation is not achieved by the deadline, GMAC intend to withdraw its application for bank holding company status.

In 2006, a Cerberus-led consortium purchased 51 percent of GMAC for $14 billion, with $6 billion coming from the New York-based firm’s own funds. The mortgage and auto lender, formerly the financing wing of General Motors, has been severely hit by the subprime mortgage crisis and general credit market turbulence.