GMAC is extending early delivery time for swap offer

GMAC edges closer to persuading enough bondholders to back a financing deal.

NEW YORK (AP) — GMAC Financial Services has again extended the early delivery time for its offer to swap $38 billion of debt, saying it’s getting closer to raising enough regulatory capital to become a bank holding company and eligible for a piece of the government’s $700 billion bank rescue plan.

GMAC, which provides financing to General Motors Corp. customers and dealers along with home mortgage loans, is attempting to exchange debt held by its divisions and Residential Capital LLC mortgage business for cash, new notes or preferred stock.

The move is an attempt to accumulate the $30 billion in regulatory capital required by the Federal Reserve in order to become a bank holding company.

GMAC warned last week that failure to convert to a bank holding company would have a “material adverse effect” on its business. And some analysts have speculated that without the federal financial help, the company could be forced to file for bankruptcy protection or shut down the ResCap division, which has accounted for the bulk of its recent losses.

A failure at GMAC also could have an untold effect on its owners, Cerberus Capital Management LP, which holds a 51 percent stake, and struggling Detroit automaker GM, which owns the rest.

So far, GMAC said about $16.6 billion, or 58 percent, of the old GMAC notes and about $3.5 billion, or 37 percent, of the old ResCap notes have been tendered. But GMAC needs about 75 percent participation in order to raise enough capital.

The offer, originally announced in November, had failed to garner much interest from bondholders. But GMAC said late last week it reached a deal with representatives for “a substantial portion” of the outstanding notes after it sweetened the deal by raising the amount of interest it would pay. However, GMAC said “significant additional participation” from other bondholders would still be needed.

Late Tuesday, GMAC extended the early delivery time for the offers until Friday, its fifth such extension. The expiration date remains Dec. 26. Bondholders that tender their old notes by Friday are eligible for payments in the form of cash or the new notes.