NEW YORK (Reuters) –
GMAC, the General Motors Corp (GM.N) financing affiliate that received a $6 billion infusion from the government, completed a multibillion dollar debt swap on Wednesday designed to bolster its capital.
The lender said holders of $21.2 billion of debt will swap their stakes for $15.7 billion of new securities plus cash. The exchange will ease GMAC's debt burden, though the lender fell short of its goal of 75 percent participation in the roughly $38 billion swap, instead getting about 56 percent.
GMAC's offer required investors to accept less than face value for their holdings. It was designed to enable Detroit-based GMAC to become a bank holding company, allowing it to tap low-cost funding and helping to assure its survival.
Pressure to complete the offer eased after the Federal Reserve awarded bank holding company status to GMAC on December 24, and the Treasury Department announced the $6 billion infusion five days later. Part of that money comes from the U.S. Treasury's $700 billion Troubled Asset Relief Program.
On Tuesday, GMAC said it would use the infusion to make loans to a wider range of borrowers. It also made some payments to GM for vehicle financing that it had previously deferred, GM said in a U.S. Securities and Exchange Commission filing.
GMAC is the main lender to GM customers, and restoring its health is key to helping the nation's largest automaker stay afloat.
Private equity firm Cerberus Capital Management LP (CBS.UL) is GMAC's other major owner.
GMAC accepted tenders from holders of $17.5 billion, or 59 percent, of old GMAC notes, and $3.7 billion, or 39 percent, of notes from its Residential Capital LLC mortgage unit.
It said the GMAC investors will receive $11.9 billion of senior guaranteed notes and $2.6 billion of preferred stock that never matures, while the ResCap investors will receive $1.17 billion of new GMAC notes.
GMAC is trying to recover after $7.9 billion in losses in the 15 months ended September 30. Most of the losses came from ResCap, but credit problems on auto loans were also worsening.
On Tuesday, GMAC said it would begin making loans to people with credit scores of 621 or higher, significantly easing a requirement for a 700 score that it had imposed in October.
The median U.S. credit score is 723, according to Fair Isaac Corp's (FIC.N) myFICO unit.
In Wednesday morning trading, GMAC's 6.875 percent notes maturing in 2012 rose 2 cents on the dollar to 76 cents, yielding about 16 percent, according to MarketAxess.
GM shares fell 7 cents to $3.73 on the New York Stock Exchange.
(Reporting by Jonathan Stempel; additional reporting by Walden Siew; editing by John Wallace and Jeffrey Benkoe)