Deal for Control of GMAC Is Near
Troubled automaker General Motors Corp. may announce as soon as today a decision to sell a controlling stake in its financial services business for about $11 billion, sources familiar with the situation said Sunday.
A consortium that includes hedge fund Cerberus Capital Management and the private equity unit of Citigroup is viewed as a front-runner for the stake in General Motors Acceptance Corp.
Cerberus also may secure some funding for the purchase from its portfolio firms, including Aozora Bank Ltd. of Japan, the sources said.
An investor group led by Kohlberg Kravis Roberts & Co. was still interested in the GMAC stake, but the sources said the Cerberus group had been leading the chase. The sources said the GM board was meeting Sunday to consider a possible GMAC stake sale.
The Detroit-based automaker said in October that it wanted to sell a controlling stake in GMAC to a strategic partner in order to restore the financing unit’s credit rating to investment grade. However, the sale of the stake has proved a complicated process, and sources stressed Sunday that efforts to structure a deal could yet prove unsuccessful.
GM on Tuesday filed its delayed annual report, restating financial results for several years. GMAC warned that there was no guarantee that the automaker would succeed in selling a majority stake in the unit.
A sale of the controlling stake would help generate much-needed cash for GM, which this month said its 2005 loss was $10.6 billion, $2 billion more than it had previously reported.
By contrast, GMAC, which provides automotive and commercial financing as well as mortgage and real estate services, earned $2.8 billion last year.
If GM is unable to structure a deal for the controlling stake, analysts say it may decide to sell GMAC’s residential mortgage operation, ResCap, or another part of GMAC, instead.