GMAC bondholders agree to equity swap

NEW YORK - GMAC Financial Services said yesterday that bondholders representing $21.2 billion of its debt had agreed to the terms of a debt-for-equity swap designed to help it qualify for much-needed federal aid.

While the swap - in which bond investors receive stock instead - amounted to less than the 75 percent participation the company said it needed, the exchange lost some of its urgency when the Federal Reserve last week approved the company's conversion to a bank holding company and the U.S. Treasury on Monday pledged $5 billion to GMAC.

In addition, the Treasury said it would lend up to $1 billion to General Motors Corp. so that the automaker would be able to buy more stock from GMAC. Those purchases are expected to raise additional capital for GMAC.

As a banking company, GMAC becomes eligible for a portion of the overall national $700 billion bank rescue package.

The participation in the debt swaps fell well short of the level GMAC previously said it needed to meet its capital goal of $30 billion.

GMAC said bondholders tendered $17.5 billion, or 59 percent, of its GMAC notes, and $3.7 billion, or 39 percent, of its Residential Capital L.L.C. notes. The company had aimed for 75 percent participation on both offers.

GMAC spokeswoman Gina Proia said the company is not disclosing the net amount of capital raised through the debt exchange. She also declined to reveal the company's current total amount of capital.

In exchange for the federal funding, the government will receive GMAC preferred shares that pay an 8 percent dividend and warrants to purchase additional shares, the department said.

The company's subsidiary, mortgage lender Residential Capital L.L.C., is based in Fort Washington and has 1,400 employees in the Philadelphia area. GMAC has said ResCap is in danger of failing without the federal rescue.