DBRS Comments on GMAC LLC Preliminary Exchange Offer Results

DBRS has today commented on GMAC LLC’s (GMAC or the Company) announcement of the results to date of the GMAC and Residential Capital LLC (ResCap) exchange offers.

In its announcement, GMAC indicated that the results, to date, of the exchange offers would result in GMAC not obtaining a sufficient amount of regulatory capital in connection with the Company’s application to become a bank holding company. To date, approximately $6.3 billion or 22% in aggregate principal amount of the outstanding GMAC old notes and approximately $2.0 billion or 21% of the outstanding ResCap old notes have been tendered. The Federal Reserve indicated that GMAC is required to have $30 billion of minimum regulatory capital to successfully convert to a bank holding company. To obtain the required regulatory capital, in addition to other sources of capital, which includes existing capital and potential TARP funds, GMAC estimates that approximately 75% of the outstanding principal of total GMAC and ResCap old notes would have to participate in the tender offers. Finally, GMAC has stated that failure to obtain the minimum required regulatory capital would result in the Company withdrawing its application to become a bank holding company. The exchange offer expires on Dec. 18, 2008.

As discussed in DBRS’s November 21, 2008, press release, failure of GMAC to execute on its plan, which includes the successful conversion to a bank holding company, could add significant noteworthy downward ratings pressure, as liquidity pressures would be intensified. DBRS views the Company’s liquidity risk as elevated since it currently has very limited access to market funding, covenants remain tight and access to new forms of funding are limited.

DBRS will provide further commentary and may take rating action as further progress of the tender offers is made public by the Company.

The applicable methodology is Rating Auto Finance Companies Operating in the United States which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.

Note:
All figures are in U.S. dollars unless otherwise noted.