GMAC Pays $607 Million in ResCap Debt
GMAC, the former finance subsidiary of General Motors(GM Quote), paid down $1.2 billion in debt at troubled mortgage business Residential Capital in an attempt by the company's private-equity owners to salvage their investment.
The company, which is now majority-owned by private-equity firm Cerberus Capital Management, bought ResCap debt with a face value of $1.2 billion in the open market for just $607 million, according to a recent filing with the Securities & Exchange Commission. The price reflects widespread uncertainty about ResCap's prospects for survival amid the U.S. housing downturn and credit crisis.
Amid speculation that GMAC's first-quarter earnings will show widening credit troubles at its auto finance unit, investors are questioning how long the company will continue to invest in ResCap to keep the second largest independent mortgage lender out of bankruptcy. ...
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