GMAC to pay GM some $100 million in annual fees

adplusone · 04-11-2006, 08:32 AM

GMAC to pay GM some $100 million in annual fees

Reuters | 2:00 pm, April 10, 2006

LOS ANGELES -- General Motors on Monday said it expected to receive some $100 million annually in fees under the terms of a deal to sell a majority stake in its finance unit, GMAC.

GM, which agreed to sell a 51 percent stake in the finance unit to a consortium led by hedge fund Cerberus Capital Management LP last week, on Monday outlined the fee payments and the agreed profit-sharing framework in a filing with securities regulators.

GM said GMAC would pay the automaker $75 million annually to be the exclusive provider of incentives relating to retail financing.

In addition, GM would collect royalty fees of at least $15 million a year from GMAC, the automaker said. GM said it expects those royalties related to sales of warranties and auto service agreements would total $25 million annually.

GMAC's dividend policy would be subject to review by the company's board and any increase that would risk a lower credit rating would require majority approval from the firm's independent directors, GM said.

(story continues at link)

http://www.autonews.com/apps/pbcs.dl...plate=printart

CHRISGTO04 · 04-11-2006, 09:58 AM

Gotta make that money man!!

MrMax · 04-11-2006, 10:39 AM

All this good news... makes me wanna stop doin wrong.

VibenPontiac · 04-11-2006, 10:50 AM

$100mm without lifting a finger while at the same time allowing GM to actually focus on building cars and trucks instead of mortgage and prime lending rates and ...pretty nice deal. This is looking like a pretty good deal more and more.

kenman923 · 04-11-2006, 11:04 AM

That should help shore up GM.

SUPERBADD75 · 04-11-2006, 11:55 AM

i guess the sale of a majority of GMAC won't be too bad after all.

rmodys · 04-11-2006, 12:00 PM

Good, the more money the better.

b4z · 04-11-2006, 12:16 PM

I wonder how much GM will PAY,yes I said PAY, GMAC to offer below market rates and incentives?
I am sure there will be big money coming out of each division's marketing budget to offer special rates.

**ChevroletRevived** · 04-11-2006, 12:28 PM

Well, I was against GMAC selling at first. I'm still mixed; it was a huge profit making business. I guess we can focus on building better vehicles now. Hopefully we'll have the money to do it though...

megeebee · 04-11-2006, 12:44 PM

Quote:

Originally Posted by ChevroletRevived

Well, I was against GMAC selling at first. I'm still mixed; it was a huge profit making business. I guess we can focus on building better vehicles now. Hopefully we'll have the money to do it though...

I was a little afraid, too. And I'm not completely convinced. But it looks as if GM turned their asset in to a "revenue stream" so to speak. Some form of guaranteed income. This may lower tax liabilities as GM becomes ( we hope) more profitable on the auto-building side of the business.

rsbaker · 04-11-2006, 01:51 PM

I don't see any down side at the moment. This sounds good. $100 in cash every year can't be bad. Can it? Hopefully it will go into product development.

01cavalier · 04-11-2006, 05:09 PM

This is good at least, it shows that they still own the name it seems, and make money from it.

macphisto · 04-11-2006, 07:23 PM

This deal looks pretty good right now. It looks like GM gets to rid themselves of managing GMAC while still reaping financial rewards.

As to how much they'll pay for discounted rates, it depends. If GM continues to be committed to limiting incentives then they likely will have to pay very little. Chances are that if the did want to cut the rate on a loan that they'd do precisely what the do no; pay the difference in rate. If the going rat eon a 60 month is 5% and GM wants to offer 2.5% then GM would likely pay the 2.5% cut off the rate. Focusing on the GM car business reduces that likelihood.

If GM can put out attractive, fun-to-drive, quality cars then they likely won't need to incentivize the cars much outside of occasional $500-1500 rebates that are likely more regionally driven. If the GM cars are selling then GMAC may want to have a good rate to attract the business away from other banks because not all buyers will automatically go with GMAC, not nowadays.

asim · 04-11-2006, 07:54 PM

One-hundred0million is not enough! LOL Maybe GM can pick up the tab of buying coffee and doughnuts for its employees.

Quickening · 04-11-2006, 08:05 PM

Every little bit helps, and getting this money for doing nothing..is nice.

04-11-2006, 08:32 AM	#1 (permalink)
adplusone 3.8 Liter Supercharged V6 Join Date: Oct 2005 Location: Texas Drives: Long Time Chevy Driver Posts: 672	GMAC to pay GM some $100 million in annual fees GMAC to pay GM some $100 million in annual fees Reuters \| 2:00 pm, April 10, 2006 LOS ANGELES -- General Motors on Monday said it expected to receive some $100 million annually in fees under the terms of a deal to sell a majority stake in its finance unit, GMAC. GM, which agreed to sell a 51 percent stake in the finance unit to a consortium led by hedge fund Cerberus Capital Management LP last week, on Monday outlined the fee payments and the agreed profit-sharing framework in a filing with securities regulators. GM said GMAC would pay the automaker $75 million annually to be the exclusive provider of incentives relating to retail financing. In addition, GM would collect royalty fees of at least $15 million a year from GMAC, the automaker said. GM said it expects those royalties related to sales of warranties and auto service agreements would total $25 million annually. GMAC's dividend policy would be subject to review by the company's board and any increase that would risk a lower credit rating would require majority approval from the firm's independent directors, GM said. (story continues at link) http://www.autonews.com/apps/pbcs.dl...plate=printart

04-11-2006, 09:58 AM	#2 (permalink)
CHRISGTO04 3.5 Liter V6 Join Date: Mar 2005 Drives: 2004 GTO Posts: 247	Re: GMAC to pay GM some $100 million in annual fees Gotta make that money man!!

04-11-2006, 10:39 AM	#3 (permalink)
MrMax 3.9 Liter V6 Join Date: Oct 2005 Posts: 766	Re: GMAC to pay GM some $100 million in annual fees All this good news... makes me wanna stop doin wrong. __________________

04-11-2006, 10:50 AM	#4 (permalink)
VibenPontiac 3.6 Liter V6 Join Date: Jan 2005 Location: Atlanta Posts: 1,109	Re: GMAC to pay GM some $100 million in annual fees $100mm without lifting a finger while at the same time allowing GM to actually focus on building cars and trucks instead of mortgage and prime lending rates and ...pretty nice deal. This is looking like a pretty good deal more and more. __________________ "Whenever I’m suffering from Insomnia, I just look at a picture of a Toyota Camry and I’m straight off.." "This is a Renault Espace, probably the best of the people carriers. Not that that's much to shout about. That's like saying 'Oh good, I've got syphilis, the best of the sexually transmitted diseases!" www.dickipedia.org

04-11-2006, 11:04 AM	#5 (permalink)
kenman923 6.2 Liter Vortec V8 Join Date: Feb 2005 Drives: 2009 Acura TSX Posts: 2,632	Re: GMAC to pay GM some $100 million in annual fees That should help shore up GM. __________________ Current: 2009 Acura TSX Gone but not forgotten: 2001 Saturn L300 1993 Saturn SL2 1986 Nissan Sentra

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04-11-2006, 11:55 AM	#6 (permalink)
SUPERBADD75 6.2 Liter Vortec V8 Join Date: Dec 2003 Location: at the corner of walk and don't walk Drives: 2008 Trailblazer LT3 2009 Mustang Posts: 2,899	Re: GMAC to pay GM some $100 million in annual fees i guess the sale of a majority of GMAC won't be too bad after all. __________________ Acura: Because if you want a really nice Honda, there's only one choice. "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." --Albert Einstein - 2008 Trailblazer LT3 - 2009 Mustang SUPPORT AMERICA: BOYCOTT WAL-MART

04-11-2006, 12:00 PM	#7 (permalink)
rmodys 7.0 Liter LS7 V8 Join Date: Jun 2005 Location: Florida Drives: 1986 Chevrolet Monte Carlo SS, 1996 Jeep Grand Che Posts: 9,499	Re: GMAC to pay GM some $100 million in annual fees Good, the more money the better. __________________ 1986 Monte Carlo SS, 1996 Jeep Grand Cherokee Laredo

04-11-2006, 12:16 PM	#8 (permalink)
b4z 3.9 Liter V6 Join Date: Jan 2003 Posts: 970	Re: GMAC to pay GM some $100 million in annual fees I wonder how much GM will PAY,yes I said PAY, GMAC to offer below market rates and incentives? I am sure there will be big money coming out of each division's marketing budget to offer special rates.

04-11-2006, 12:28 PM	#9 (permalink)
ChevroletRevived GMI Staff Member Join Date: Jul 2004 Location: The Good Ol United States of America Posts: 8,863	Re: GMAC to pay GM some $100 million in annual fees Well, I was against GMAC selling at first. I'm still mixed; it was a huge profit making business. I guess we can focus on building better vehicles now. Hopefully we'll have the money to do it though... __________________ GMI's Revitalization in Action Director Check out our latest lineup by Clicking Here If you've got inside news and would like to be a GMInsider, send me a private message or email me HERE.

04-11-2006, 01:51 PM	#11 (permalink)
rsbaker 5.3 Liter Vortec V8 Join Date: Jan 2003 Posts: 1,384	Re: GMAC to pay GM some $100 million in annual fees I don't see any down side at the moment. This sounds good. $100 in cash every year can't be bad. Can it? Hopefully it will go into product development.

04-11-2006, 05:09 PM	#12 (permalink)
01cavalier 6.0 Liter LS2 V8 Join Date: Jul 2005 Location: Portland, OR Drives: 2007 Cobalt Posts: 4,818	Re: GMAC to pay GM some $100 million in annual fees This is good at least, it shows that they still own the name it seems, and make money from it.

04-11-2006, 07:23 PM	#13 (permalink)
macphisto 3.8 Liter V6 Join Date: Oct 2004 Posts: 462	Re: GMAC to pay GM some $100 million in annual fees This deal looks pretty good right now. It looks like GM gets to rid themselves of managing GMAC while still reaping financial rewards. As to how much they'll pay for discounted rates, it depends. If GM continues to be committed to limiting incentives then they likely will have to pay very little. Chances are that if the did want to cut the rate on a loan that they'd do precisely what the do no; pay the difference in rate. If the going rat eon a 60 month is 5% and GM wants to offer 2.5% then GM would likely pay the 2.5% cut off the rate. Focusing on the GM car business reduces that likelihood. If GM can put out attractive, fun-to-drive, quality cars then they likely won't need to incentivize the cars much outside of occasional $500-1500 rebates that are likely more regionally driven. If the GM cars are selling then GMAC may want to have a good rate to attract the business away from other banks because not all buyers will automatically go with GMAC, not nowadays.

04-11-2006, 07:54 PM	#14 (permalink)
asim Firebird Concept (the turbine one) Join Date: Mar 2005 Location: Houston, TX Posts: 11,271	Re: GMAC to pay GM some $100 million in annual fees One-hundred0million is not enough! LOL Maybe GM can pick up the tab of buying coffee and doughnuts for its employees. __________________ I'll make a new sig. Later.

04-11-2006, 08:05 PM	#15 (permalink)
Quickening 7.0 Liter LS7 V8 Join Date: Oct 2005 Location: San Antonio, Texas Drives: 2004 Saab 9-3 Aero Posts: 5,149	Re: GMAC to pay GM some $100 million in annual fees Every little bit helps, and getting this money for doing nothing..is nice. __________________ 2004 Saab 9-3 Aero

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