The document provides an overview of a proposed transaction where GM would sell a 51% controlling stake in GMAC to a consortium led by Cerberus Capital Management. Key points:
- Cerberus would control the consortium's voting shares and has a strong track record in financial institutions.
- GM would receive $14B cash over 3 years, with $10B at closing. GMAC's credit rating would be de-linked from GM.
- The transaction aims to strengthen GMAC's capital base long-term through investment and earnings reinvestment.
- GMAC would continue to exclusively provide GM's auto financing programs for 10 years, supporting GM vehicle sales while generating profitable assets for
McGladrey presentation at June 2012 EEI Public Filers Symposium - Update on J...Brian Marshall
Update on Joint Revenue Recognition Project
Speaker - Brian Marshall
This session focuses on the FASB and IASB's second joint exposure draft on Revenue Recognition issued in November 2011, a key step in the Board's efforts to finalize converged guidance.
Unlocking The Value Through Corporate Restructuring Gvalior Seminar Corp Re...Pavan Kumar Vijay
This presentation enumerates the practical aspects of merger, demerger and reduction of capital and the strategies involved therein. It also highlights certain key issues involved in corporate restructuring.
The Bankruptcy Option Recapitalization Through A 363 Salemindimcclure
Bank holding companies ("BHC"s) across the US have billions of dollars of holding company debt and trust preferred stock ("TruPS"). Deeply troubled banks with highly leveraged holding companies are struggling with bond and TruPS holders who either cannot or will not consider any restructuring to facilitate a recapitalization or sale. These BHCs should exhaust all alternatives to complete a recapitalization of the BHC. If those efforts are not successful, they should consider a bankruptcy and a sale of bank stock pursuant to 11 U.S.C. §363 (a "363 Sale") to avoid seizure of the bank.
Novidades no Windows Mobile Line of Business Solution Accelerator 2008Pedro Lamas
Trata-se de uma solução que integra grande parte das tecnologias e serviços móveis da Microsoft, onde serão apresentadas técnicas avançadas para o controlo e gestão de memória e cache, distribuição de aplicações, criação de código para diferentes camadas aplicacionais, localização, etc.
McGladrey presentation at June 2012 EEI Public Filers Symposium - Update on J...Brian Marshall
Update on Joint Revenue Recognition Project
Speaker - Brian Marshall
This session focuses on the FASB and IASB's second joint exposure draft on Revenue Recognition issued in November 2011, a key step in the Board's efforts to finalize converged guidance.
Unlocking The Value Through Corporate Restructuring Gvalior Seminar Corp Re...Pavan Kumar Vijay
This presentation enumerates the practical aspects of merger, demerger and reduction of capital and the strategies involved therein. It also highlights certain key issues involved in corporate restructuring.
The Bankruptcy Option Recapitalization Through A 363 Salemindimcclure
Bank holding companies ("BHC"s) across the US have billions of dollars of holding company debt and trust preferred stock ("TruPS"). Deeply troubled banks with highly leveraged holding companies are struggling with bond and TruPS holders who either cannot or will not consider any restructuring to facilitate a recapitalization or sale. These BHCs should exhaust all alternatives to complete a recapitalization of the BHC. If those efforts are not successful, they should consider a bankruptcy and a sale of bank stock pursuant to 11 U.S.C. §363 (a "363 Sale") to avoid seizure of the bank.
Novidades no Windows Mobile Line of Business Solution Accelerator 2008Pedro Lamas
Trata-se de uma solução que integra grande parte das tecnologias e serviços móveis da Microsoft, onde serão apresentadas técnicas avançadas para o controlo e gestão de memória e cache, distribuição de aplicações, criação de código para diferentes camadas aplicacionais, localização, etc.
GCC Hotel Management Contracts Survey - February 2015John_Podaras
Review of the main commercial terms for 61 management contracts between owners of hotels in the GCC and international hotel management companies.
Survey carried out in February 2015 by Hotel Development Resources, Dubai with the support and assistance of the office of Al Tamimi & Co.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
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Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
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Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
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2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
Services Presents at AFSA Finance Industry Conference for Fixed Income Investors May 16, 2006
1. Update on
AFSA
Investor Presentation
May 16, 2006
Sanjiv Khattri
EVP & CFO
2. Forward Looking Statements
In the presentation that follows and in related comments by General Motors Acceptance Corporation
management, our use of the words “expect”, “anticipate”, “estimate”, “forecast”, “objective”, “plan”,
“goal”, “project”, “outlook”, “priorities,” ”targets”, “intend”, “evaluate”, “pursue”, “seek” and similar
expressions is intended to identify forward looking statements.
While these statements represent our current judgment on what the future may hold, and we believe
these judgments are reasonable, actual results may differ materially due to numerous important
factors that are described in GMAC’s most recent report on SEC Form 10-K, which may be revised or
supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among
others, the following: the ability of General Motors to complete a transaction with a strategic investor
regarding a controlling interest in GMAC while maintaining a significant stake in GMAC, securing
separate credit ratings and low cost funding to sustain growth for GMAC and ResCap and maintaining
the mutually beneficial relationship between GMAC and General Motors; changes in economic
conditions, currency exchange rates, significant terrorist attacks or political instability in the major
markets where we operate; changes in the laws, regulations, policies or other activities of
governments, agencies and similar organizations where such actions may affect the production,
licensing, distribution or sale of our products, the cost thereof or applicable tax rates; and the threat of
terrorism, the outbreak or escalation of hostilities between the United States and any foreign power or
territory and changes in international political conditions may continue to affect both the United States
and the global economy and may increase other risks.
Use of the term “loans” describes products associated with direct and indirect lending activities of
GMAC’s global operations. The specific products include retail installment sales contracts, loans, lines
of credit, leases or other financing products. The term “originate” refers to GMAC’s purchase,
acquisition or direct origination of various “loan” products.
1
6. Components of Transaction
GM has agreed to sell a 51% controlling interest in GMAC to a
Consortium led by Cerberus Capital Management, L.P. (“Cerberus”)
Cerberus will control all of the Consortium’s 51% voting shares
Cerberus has strong track record of performance
One of the largest private investment firms in North America, with $18 billion
under management
Experienced investor in financial institutions and automotive businesses
Long-term investment horizon
Significant stability for all stakeholders
Consortium and GM to invest $1.9 billion in preferred equity
GM expects to receive approximately $14B in cash over 3 years
$10B at closing
7. Components of Transaction (cont’d)
GM will receive dividends from GMAC equal to its earnings
prior to closing, which will largely fund GM repayment of inter-
company debt
GMAC and most of its U.S. operations (excluding the Insurance
Group) will be converted to Limited Liability Company (LLC)
form
Beneficial for shareholders’ tax planning
Long-term investment by Consortium
Committed to a 5-year minimum hold period
In years 1-2 after closing, plan to retain essentially all GMAC’s “after-
tax” earnings in the business
In years 3-5 after closing, Cerberus committed to reinvest all of its after-
tax distributions into GMAC preferred stock
Capital plan reflects a return to GMAC’s historical record of
successfully reinvesting profits for growth and profitability
8. Components of Transaction (cont’d)
Assets retained by GM
At closing, GM will retain approximately $20 billion of assets
Predominantly U.S. lease assets and associated funding
Net book value estimated at about $4 billion
Retained lease assets reduce GMAC’s credit exposure to GM
Going forward, GMAC will continue to originate and retain all lease
assets
GM call option term of ten years on Global Auto Finance
business
GM has to have either an investment grade rating or a rating higher
than GMAC’s rating to enable call
Arranging incremental credit facilities totaling $25 billion --
supported by $12. 5 billion Citigroup commitment -- to enhance
GMAC’s already strong liquidity
Committed 3-year revolving facility
Asset-backed funding to support lease, wholesale, SmartBuy and other
not traditionally securitized assets
9. Strong Independent Corporate Governance
Cerberus will be the managing owner of GMAC LLC and control the
Consortium’s 51% voting shares
Board Composition:
13 Board members
Consortium: 6
GM: 4
Independent: 3
Audit Committee to consist of all three Independent Directors
Consortium has the ability to raise a significant amount of new equity
capital for GMAC and dilute GM’s ownership without GM consent
Majority Independent Director approval required for certain matters,
including related party transactions and certain dividend payouts
10. Mutually Beneficial Services Agreements
Services Agreements support key GM-GMAC objectives:
GM: Strategic support for GM vehicle sales worldwide
GMAC: Increased finance penetration and revenue
GMAC granted 10-year exclusivity covering U.S., Canadian and
International subvented wholesale and consumer business
GMAC commitment to provide financing to GM retail customers and
wholesale dealers in accordance with historical practices
GMAC will retain right to make all credit decisions
GMAC will finance a broad spectrum of customers and dealers generally in line
with prior years
Agreement provides GMAC ample flexibility to provide GM with required
financing support without compromising historical underwriting standards
Agreement provides GMAC with a competitive return
11. Profitable Asset Generation Capability Protected
Services agreements will preserve GM / GMAC mutually-beneficial
relationship for the long-term
Support global $60+ billion a year auto loan origination platform
Services Agreements
Will continue to finance
Will continue to give GMAC
GM vehicles to customers
exclusivity on retail and
across the full credit
lease subvented financing
spectrum
programs
GM “special rate” programs represent steady profitable business for
GMAC
Generate large volume of auto finance assets
Assets originated at low acquisition cost to GMAC
Generate higher credit quality assets
13. Credit Exposure to GM
Under terms of transaction, GMAC’s unsecured credit exposure to
GM will be capped at $1.5 billion on a global basis
Cap will include receivables from GM and any implicit “out of the money”
risk sharing or residual value support due to loss in residual values
Estimate that GMAC’s unsecured credit exposure to GM will
amount to $0.4 billion at closing
GM to repay certain inter-company borrowings prior to closing
GM to paydown residual support and risk sharing obligations on lease
assets remaining with GMAC
Going forward, GM to pay residual support upfront on new lease assets
originated by GMAC
Undrawn GMAC $4 billion unsecured credit line to GM, expiring Sept 2006,
not planned to be renewed
14. GMAC Credit Profile
GMAC’s credit profile will be improved considerably
Consortium and GM to invest $1.9 billion in preferred equity
Significant re-investment of earnings over 5 years
Substantial reduction in credit exposure to GM
Strong independent corporate governance
10-year steady flow of auto financing volume for GMAC
15. Impact to Credit Rating
Transaction expected to achieve rating de-linkage from GM
Sale by GM of controlling interest
Dramatic reduction in GM exposure
Sound governance to protect all GMAC stakeholders
Contractual agreement that ensures arm’s length GM-GMAC operating
relationship
Rating agencies have provided indication that transaction will
achieve de-linkage of GMAC credit ratings from those of GM
Target stable investment grade rating
Fundamentally strong credit profile
Need some time to “season” new structure and validate de-linkages
with GM
16. GM/GMAC Strategic Linkage
Solid
Strategic
Linkage
Auto financing relationship
GMAC exclusive provider of GM’s subvented auto finance programs
GMAC relationships with GM dealer network
GMAC Customers: Dealer floorplan financing
GMAC Sales Force: Auto finance & insurance products
“GM Family” customer base
Millions of customers for GMAC’s consumer finance products
17. Next Steps
Meet all pre-closing conditions
PBGC agreement that GMAC and its subsidiaries will have no
liability that could arise from GM’s pension plans
No Material Adverse Effect (including a credit rating below CCC
for GM’s unsecured long-term debt)
Obtain significant number of regulatory approvals
Other appropriate conditions, opinions and approvals
Close transaction in Q4-2006
18. Transaction Benefits Summary - GM
Significant liquidity for GM
$10 billion upfront
$14 billion over 3 years
Broad auto financing support for GM
GM will benefit from comprehensive wholesale and retail automotive financing
to support its vehicle sales globally
Ongoing earnings from GM’s 49% equity stake retained in GMAC
Expect that minority equity stake in thriving company will generate steadily
growing earnings stream
Will remain a significant % of GM total earnings
19. Transaction Benefits Summary - GMAC
Strengthened GMAC capital base long-term
Preferred equity injection of $1.9 billion
Earnings reinvestment provisions
Improved GMAC liquidity
Committed 3-year $25 billion funding facilities
Anticipated access to unsecured markets
Significant and steady flow of auto financing revenue
Agreement grants GMAC 10-year exclusivity on GM’s subvented auto
finance programs
Believe transaction will achieve credit rating de-linkage from GM
Governance provisions further establishing GMAC independence from GM
Cap on unsecured credit exposure to GM
Contractual arm’s length agreement governing all GM/GMAC auto financing
Consortium committed to a successful GMAC
View transaction as ‘strategic” with a long-term investment horizon
26. Earnings Mix – Geographic Diversification
International Net Income*
CAGR**
2001 2005
$ Millions
Financing 192 415 21%
Mortgage 72 270 39%
Insurance 9 63 63%
Total 273 748 29%
* Income outside U.S. and Canada ** Compound Annual Growth Rate
27. Insurance Operations
Premium / Revenue Insurance Net Income
growing $ Millions
417
International growth 400
329
Niche acquisitions
300
Favorable loss cost
experience 179
200
Steadily increasing
87
100
underwriting profits
Increasing competitive 0
trends 2002 2003 2004 2005
Growing investment
portfolio
($ Billions) 12/02 12/03 12/04 12/05
Market Value of Investment $5.1 $6.2 $7.3 $7.7
Portfolio
28. Mortgage Operations
GMAC has maintained
ResCap Net Income
strong profitability at
$ Millions
its Residential
1,200
Mortgage Operations 1,021
despite decline in 912
1,000 904
industry volume and 800
margin pressures
600
Growth in residential
market share for 9 319
400
consecutive years
200
Increased mortgage
servicing income 0
Profitable expansion 2002 2003 2004 2005
overseas Memo: ($ Trillions)
2.8 3.8 2.7 2.9
Industry Volume*
Stand-alone investment
U.S. Mortgage
6.3 7.1 8.1 9.1
grade rating Debt Outstanding*
* Source: Fannie Mae
29. Financing Operations
Funding constrained
business Financing
$ Millions
Ratings impact 1,600 1,476
competitiveness 1,360
1,239
Will leverage upcoming 1,200 1,064*
ratings delinkage
Leverage existing 800
relationships to capture
opportunities within GM 400
dealer channel
Leverage existing dealer 0
relationships to expand 2002 2003 2004 2005
presence in non-GM • Excluding after-tax goodwill impairment of $398 million for
dealer network Commercial Finance
Continue to expand
footprint into new
countries
31. Strong Liquidity Position
GMAC continues to have access to large liquidity cushion
Cash balance of $22 billion* at March 31, 2006
Over $45 billion of unutilized bank lines and conduit capacity
Multi-year committed whole loan facilities with Bank of America and
Bank of Nova Scotia with $59 billion of unutilized commitments
Arranging incremental credit facilities totaling $25 billion –
supported by $12.5 billion Citigroup commitment – to
enhance GMAC’s already strong liquidity
Committed 3-year revolving facility
Asset-backed funding to support SmartLease, wholesale, SmartBuy
and other assets that have not been traditionally securitized
* Includes $4.8B in cash invested in a portfolio of highly liquid marketable securities
32. Strong Liquidity Position (cont’d)
In March, closed sale of majority interest in GMAC
Commercial Mortgage and received $8.8 billion comprised of
sale proceeds and repayment of inter-company debt
Strong stand-alone ResCap funding capability established
ResCap expected to repay $3.6 billion subordinated note to GMAC
using proceeds from recent bond transaction
Many other innovative funding channels established
33. 2005 U.S. Term Funding
$41 Billion
10% Secured Funding
& Whole Loan
Sales
Unsecured
Funding
90%
Note: Represents domestic auto finance only
34. 2005 U.S. Term Funding
$41 Billion
Money Market
Investors
10% Secured
Funding
Term Investors & Whole
42% Loan Sales
(90%)
35% Whole Loans
13%
Unsecured
(10%)
Funding
Note: Represents domestic auto finance only
35. Evolution of U.S. Term Funding
2005
2004
2001
10%
21%
46%
54%
90%
79%
$41 Billion
$47 Billion
$65 Billion
Secured Funding & Unsecured Funding
Whole Loan Sales
Note: Represents domestic auto finance only
36. Structural Subordination Analysis
Asset Coverage Ratio continues to adequately protect
unsecured debt holders despite increase in secured funding
Although unencumbered assets have declined, asset coverage ratio
remains stable-to-higher as unsecured debt levels decline even more
rapidly
$ Billions 2004 2005 Q1 2006 2006
188 151 140
Unencumbered
Assets*
Unsecured Debt 169 132 120
Stable-to-
Asset Coverage 111% 115% 117%
Higher
Ratio
* Total Assets less [Secured Assets+Other Liabilities+Intangible Assets]
37. GMAC Funding Plan
GMAC’s innovative funding initiatives have reduced its need to
rely on unsecured financing
With a stable and potentially improving credit rating post-
closing, GMAC will opportunistically seek to access the
unsecured institutional and retail markets
38. GMAC Global Liquidity Profile
GMAC has access to massive liquidity cushion
Two large, multi-year funding agreements: Bank of America (BofA), Bank of
Nova Scotia (BNS), with plans for a third $25B facility anchored by Citigroup
BofA and BNS commitments for retail assets while the $25B facility includes leases,
dealer floor plan, SmartBuy, and other assets not traditionally securitized
Continued access to significant amount of bank funding
$ billion
As of 3/31/06 Line Size Utilized Unutilized
Cash (1) 22 0 22
(2)
Committed Flow agreements 75 16 59
Proposed Citigroup-led $25B Funding Facility 25 0 25
Committed Bank facilities 85 39 46
185 55 130
Total Committed
Uncommitted Bank facilities 9 8 1
Total 216 63 153
Note: (1) Including $4.8Bn of marketable securities
(2) Utilized/expired
39. Consolidated Asset and Liability Maturities
Interest-Earning Assets
$ Billions
125 Interest-Bearing Liabilities 104
100 86
77
67
75 63
56
50 44
50
29
19
25
-
Under 3 Under 6 Under 1 Under 2 Under 3
months months year years years
Note: Includes cash, excludes on-balance sheet secured debt and the related assets, as of March 31, 2006
40. ResCap Capital Structure
GMAC plans to maintain the ResCap firewall to preserve
ResCap’s relatively higher credit rating
ResCap already enjoys significant
access to unsecured liquidity
$ Billion (as of 05/16/06)
Global Debt Issued 12.4
Global Bank Lines 4.0
Total 16.4
Firewall: Governance and Dividend Limitations
41. Conclusion
Operating metrics for Financing, Mortgage and Insurance
remain strong
Some margin pressures due to interest rate cycle and competitive
trends, but expect to have solid performance in 2006
GM, GMAC and Cerberus led consortium working on speedy
closing of 51% sale transaction
Target fourth quarter closing
Plan to maintain current conservative funding strategy until risks to
closing are reduced
Following the closing of the 51% sale, GMAC will be even better
positioned to execute our business plan under which we will:
Support GM vehicle sales with a broad range of auto financing activities
Continue to grow all segments of the business
Generate a strong return on investment for GMAC’s shareholders
42. GMAC Strategic Vision
Create Premier Global Finance Company
GMAC Business Strengths Consortium Provided Benefits
Leadership positions Stable/Improving credit rating
across all major sectors
Balance sheet capacity
#1 in Auto Finance
Top 10 player in Mortgage Competitive funding cost
#1 provider of Extended
Operational expertise
Warranty
#1 provider of Dealer Inventory
Strong independent corporate
Insurance
governance
Tremendous asset
origination capability
World-class servicing
Well-managed risk profile
Global franchise
43. Long-Term Outlook
Existing Improved Capital
+
Business Position and Credit
Strengths Ratings
Long Term Profitable Growth