GMAC, the financing arm of struggling automaker General Motors, said today it failed to raise sufficient capital to become a bank holding company, casting serious doubt about its future as a going concern.
So far, GMAC has managed to exchange $8.3 billion, but they need $30 billion in regulatory capital by December 31 to satisfy Federal Reserve requirements to get the deal done.
If unable to raise the necessary funds, they plan to withdraw their application, though a potential auto bailout could still buoy the ailing company.
“As a practical matter, GMAC does not believe it has the ability to make further changes to the GMAC and ResCap offers following the new deadline at 5:00 p.m., New York City time, on Friday, December 12 and consummate the GMAC and ResCap offers prior to the end of the calendar year,” the company said in a filing.
Assuming the company fails to complete the offers, “it would have a near-term material adverse effect on GMAC’s business, results of operations, and financial position.”
Private equity firm Cerberus Capital owns a 51 percent majority stake in GMAC, with GM holding the other 49 percent. The unit provides both auto and home loan financing.
GMAC reported a third-quarter loss of $2.5 billion, thanks largely to losses in its Residential Capital unit, which included now defunct wholesale mortgage lender Homecomings Financial and GMAC Mortgage retail branches throughout the country.