GMAC said Wednesday that it had completed a debt-exchange offer as part of becoming a bank holding company, though just 59% of bondholders took part in the offering, less than the 75% the company had said it needed to achieve its capital goal.

GMAC said it would issue $11.9 billion of GMAC senior guaranteed notes and $2.6 billion of GMAC cumulative perpetual preferred stock.

Completion of the debt-exchange offer came two days after the Treasury Department gave GMAC, which is jointly owned by General Motors Corp. and Cerberus Capital Management, $6 billion of support from the Troubled Asset Relief Program to help it reorganize as a bank holding company.

GMAC got approval from the Federal Reserve Board last week to convert to a bank holding company, but the approval was contingent on its completing the debt-exchange offer.
The company had said participation by bondholders in the debt exchange was crucial to getting the Fed approval, which required that GMAC raise its regulatory capital to $30 billion, from about $9 billion at Sept. 30.

GMAC had set a goal of boosting its capital by $38 billion. It sweetened terms of the debt exchange on Dec. 15 by increasing the preferred shares' dividend in the offer to 9%, from 5%. It also added covenants to the bond issue aimed at protecting holders.

Under the Troubled Asset Relief Program (TARP) financing arrangement announced this week, the Treasury received $5 billion of senior preferred stock with an 8% dividend. In return, GMAC agreed to issue warrants in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase; this "extra" preferred is to pay a 9% dividend, if the warrants are exercised.

The Treasury also loaned GM $1 billion the automaker is to use to participate in a rights offering for GMAC's conversion from a Utah industrial loan company to a bank holding company.

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