Your faithful blogger is suffering this morning. A night of birthday celebration is currently proving that knowledge of moderation (and the mysteries of escrow) do not simply come with age. But compared to the hangover caused by a decade-long cheap credit binge, my suffering seems downright tolerable. Just ask GMAC. The Detroit News reports that GM’s once-captive lender has delayed the delivery date for debt swap deliveries for the fifth time, as it desperately attempts to round up enough capital to achieve bank holding status. Despite improving its offer last week, GMAC still says it needs “significant additional participation” from bondholders to make its goal of $30b in regulatory capital. Luckily the DetN is happy to sugar-coat the pain by headlining the story in as optimistic terms as possible (GMAC closer to raising enough capital to become bank holding company). And though technically true, there’s devils in them thar details.
GMAC has tendered $16.6b, or 58 percent of its outstanding notes, which is fairly close to its 75 percent required participation. But the killer is that critical ResCap debt has only attracted about $3.5b in swap offers. That’s a mere 37 percent of its outstanding debt. And without more takers for ResCap debt, GMAC will be dragged into oblivion by its radioactive, mortgage-backed holdings. Like any other hangover, killing off the last portions of lingering toxicity will be the toughest task for GMAC. And with the economy suffering right along with it, there’s no counting on holiday good will to pull GMAC from its misery.
This is a bit old, but I just found it. I was under the impression that GM retained bankruptcy representation just in case of the “worst”, but apparently GM’s bankruptcy representation, Martin Bienenstock of Dewey & LeBoeuf, is actually encouraging a bankruptcy to move GM into the future.
http://www.abajournal.com/news/gm_lawyer_plans_futuristic_restructuring_as_auto_bailout_fails/
http://www.bloomberg.com/apps/news?pid=20601087&sid=a27ys4bkgADQ&refer=home
In the end, it always depends on who likes you and who doesn’t.
ResCap could get funded today, if there’s a bank (already flush with bailout money) that sees some ROI in grabbing the percentage that Cerberus doesn’t already own.
The millstone may be the blatant Cerberus connection.
It’s already a political nightmare to be lumping private Chrysler in with pubic F and GM when talking bailout.
Treasury could easily make a few calls to one of the many banks that have been gifted out of the 700B (or loaned out of the 2T that few talk about) and make that deal happen.
Problem is, the benefit to Cerberus would be just too direct and just too public to swept under the rug with the rest of this giveaway.
The other angle is that killing GMAC will help eliminate the dealer overage in an expeditious manner. Forcing change on some companies that just can’t seem to do anything beyond pay it lipservice.
“Sorry kids. No more work at the mill. Gonna have to sell the whole lot of you off for medical experiments.”
porschespeed:
I think you’ve just identified the Wagoner, Lutz, LaNeve brand/dealer management theme song:
“Every brand is sacred,
every brand is great.
If a brand gets wasted
God gets quite irate.
Every brand is sacred,
every brand is good.
Every brand is needed,
in your neighborhood.”
no_slushbox,
You read my mind.
Like the twisted comic book that it is.
“Bring me a bucket…”
@ no_slushbox: Brilliance!
This company’s dead.
No it’s not. It’s just shutting down for a few weeks to equalize the sales chain.
No. It’s got no money. No pulse. It’s dead I tell you…
Though I imagine this thread will get about the same amount of traffic as a Chrysler showroom here’s the new wrinkle…
WSJ and some rumblings I’ve heard say that GM and Cerberus are talking again. Guess what the pivot point in the circle-jerk is? C’mon guess…
GMAC. So Cerberus still sees the GMAC end-game as in play. A ‘combined’ GM/Chrysler would provide the political cover for ‘someone’ to fund ResCap to the point where GMAC becomes a ‘bank’.
Voila! The angry puppy gets fed.