Nov 25, 2007


Part of a series The Great American Write-Down

GMAC Last year Cerberus Capital bought a 51 percent stake in GMAC. Their mortgage lending unit, ResCap, lost $2.2 billion (25 percent) in value last quarter. GM was required by the sale covenants to capitalize ResCap with up to $1 billion if needed. They have done that but the company will still require additional funds to maintain a net worth level of $5.4 billion, also required in those sale covenants. Besides issuing $750 million in new bonds GMAC is considering purchasing a non-US mortgage company that will dilute the losses into a larger pool of mortgages.

Now, What's Bad for GMAC Is Bad for the U.S.A.
GMAC Bids to Rescue ResCap
UPDATE 2-GMAC targets Northern Rock; sale of ResCap parts