Sunday
General Motors may announce sale
It has been reported that General Motors Corp. may announce soon a decision to sell a controlling stake in General Motors Acceptance Corp., its financial services business, for about $11 billion.
A consortium that includes hedge fund Cerberus Capital Management LP and the private equity unit of Citigroup (Research) is viewed as a front runner for the GMAC stake. Cerberus may also secure some funding to help buy the GMAC stake from its portfolio firms, including Aozora Bank Ltd. of Japan, the sources said. Japan's Norinchukin Bank may also join the Cerberus consortium. An investor group led by private equity firm Kohlberg Kravis Roberts & Co. was still interested in the GMAC stake, but the sources said the Cerberus group has been leading the chase.
The sources said the GM board was meeting on Sunday to consider a possible GMAC stake sale.
GM (Research) said in October it wanted to sell a controlling stake in GMAC to a strategic partner in order to restore the financing unit's credit rating to investment-grade status. However, the sale of the stake has proved a complicated process and sources stressed on Sunday that efforts to structure a deal could yet prove unsuccessful.
GM on Tuesday filed its delayed annual report, restating financial results for several years. GMAC warned there was no guarantee GM would succeed in selling a majority stake in GMAC.
GM needs the cash and a sale of the controlling stake in GMAC would help generate much-needed cash for GM, which earlier this month said its massive 2005 loss was $10.6 billion -- $2 billion more than it had previously reported. By comparison, GMAC, which provides automotive and commercial financing as well as mortgage and real-estate services, earned $2.8 billion last year.
If GM is unable to structure a deal for the controlling stake in GMAC, analysts say it may decide to sell GMAC's residential mortgage operation, ResCap, or another part of GMAC, instead.
Big financial firms and private equity groups have shown great interest in GMAC's businesses over the past year.
On March 23, a consortium of Kohlberg Kravis Roberts, Five Mile Capital Partners LLC and Goldman Sachs Capital Partners bought 78 percent of GMAC's commercial mortgage unit, GMAC Commercial Holding Corp., for $1.5 billion and assumed $7.3 billion in debt owed to GMAC. In December, GMAC agreed to sell up to $20 billion in U.S. retail automotive assets to Scotia Capital, the investment banking unit of Bank of Nova Scotia (Research).In July, Bank of America Corp. (Research) agreed to buy up to $55 billion in car loans from GMAC over five years.
Cerberus made its name as a distressed asset buyer and has grown to become one of the largest hedge fund traders and buyout firms in the world.
A consortium that includes hedge fund Cerberus Capital Management LP and the private equity unit of Citigroup (Research) is viewed as a front runner for the GMAC stake. Cerberus may also secure some funding to help buy the GMAC stake from its portfolio firms, including Aozora Bank Ltd. of Japan, the sources said. Japan's Norinchukin Bank may also join the Cerberus consortium. An investor group led by private equity firm Kohlberg Kravis Roberts & Co. was still interested in the GMAC stake, but the sources said the Cerberus group has been leading the chase.
The sources said the GM board was meeting on Sunday to consider a possible GMAC stake sale.
GM (Research) said in October it wanted to sell a controlling stake in GMAC to a strategic partner in order to restore the financing unit's credit rating to investment-grade status. However, the sale of the stake has proved a complicated process and sources stressed on Sunday that efforts to structure a deal could yet prove unsuccessful.
GM on Tuesday filed its delayed annual report, restating financial results for several years. GMAC warned there was no guarantee GM would succeed in selling a majority stake in GMAC.
GM needs the cash and a sale of the controlling stake in GMAC would help generate much-needed cash for GM, which earlier this month said its massive 2005 loss was $10.6 billion -- $2 billion more than it had previously reported. By comparison, GMAC, which provides automotive and commercial financing as well as mortgage and real-estate services, earned $2.8 billion last year.
If GM is unable to structure a deal for the controlling stake in GMAC, analysts say it may decide to sell GMAC's residential mortgage operation, ResCap, or another part of GMAC, instead.
Big financial firms and private equity groups have shown great interest in GMAC's businesses over the past year.
On March 23, a consortium of Kohlberg Kravis Roberts, Five Mile Capital Partners LLC and Goldman Sachs Capital Partners bought 78 percent of GMAC's commercial mortgage unit, GMAC Commercial Holding Corp., for $1.5 billion and assumed $7.3 billion in debt owed to GMAC. In December, GMAC agreed to sell up to $20 billion in U.S. retail automotive assets to Scotia Capital, the investment banking unit of Bank of Nova Scotia (Research).In July, Bank of America Corp. (Research) agreed to buy up to $55 billion in car loans from GMAC over five years.
Cerberus made its name as a distressed asset buyer and has grown to become one of the largest hedge fund traders and buyout firms in the world.
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