General Motors has revealed this morning it has sold a 51% controlling interest in General Motors Acceptance Corp. (GMAC) to a consortium of investors led by Cerberus Capital Management.
The private investment firm in partnership with Citigroup and Aozora Bank is to pay around $14bn in cash over three years.
In a statement released this morning GM chairman and chief executive Officer Rick Wagoner says: "We look forward to working with Cerberus to maintain and grow GMAC's traditional strong performance and contribution to the GM family. This agreement is another important milestone in the turnaround of General Motors. It creates a stronger GMAC while preserving the mutually beneficial relationship between GM and GMAC. At the same time, it provides significant liquidity to support our North American turnaround plan, finance future GM growth initiatives, strengthen our balance sheet and fund other corporate priorities.”
The deal was agreed following a special meeting yesterday of the GM board of directors to consider the offer from Cerebus.
The transaction is subject to a number of US and international regulatory and other approvals. The companies expect to close the transaction in the fourth quarter of 2006.
Mark Neporent, Cerberus' chief operating officer and senior managing director, says the firm is committed to a long-term partnership that it expects to bring sustained growth, diversity of product offerings and lasting benefits to GM and GMAC employees, customers and other stakeholders.
Citigroup will arrange two syndicated asset-based funding facilities totalling $25bn to support GMAC's ongoing business. It has committed $12.5bn in the aggregate to these two facilities. The funding facilities are in addition to Citigroup's initial equity investment in GMAC.
The GMAC board of directors will have 13 members - six appointed by the consortium; four appointed by GM; and three independent members. GMAC will continue to be managed by its existing executive management.
The news follows the publication this morning of record results by GMAC-RFC the UK based mortgage lending subsidiary of ResCap, itself a part of GMAC.
The lender posted pre-tax profits of £153.2m for 2005, with mortgage lending out-growing the market average for the 6th year in succession, up 9% to £6.93bn. Mortgage trading, by way of securitisation and portfolio sales, increased to £6.2bn.
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