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http://seekingalpha.com/article/76529-gm-about-to-throw-away-more-money?source=yahoo


I remain surprised that GM is still in business. It loses money on cars, on financing, and it is behind the curve on a transition away from SUVs. GM is the walking dead, a true Zombie corporation.

Now I see that GM, Cerberus May Pledge $750 Million to ResCap Rescue.

General Motors Corp. and Cerberus Capital Management LP may agree to guarantee part of a $3.5 billion debt package designed to help GMAC LLC's Residential Capital unit avert bankruptcy.

GM, the world's biggest automaker, and Cerberus, the New York-based private-equity firm, may pay debt holders as much as $750 million if ResCap defaults, GMAC said in a filing today. The cost would be split by the two firms according to their stakes in GMAC, the Detroit-based auto and home lender said. GM sold 51 percent of GMAC to Cerberus-led investors in 2006.

The accord would mark a reversal for GM, which has said it has no obligation to support ResCap after the GMAC unit was battered by subprime mortgage losses. ResCap ranked among the 10 biggest U.S. mortgage lenders last year. The new arrangement is part of a financial plan that should provide enough liquidity for 12 months, GMAC said.

"It's good for GMAC in that it shows support for a troubled operation and it suggests the strategic importance of the unit," said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tennessee. "It remains to be seen how far they will go."
My Comment: There is no strategic importance of GMAC. If there was, why did GM sell 51% of it? More to the point, GM had a chance to unload the whole shebang to a bunch of complete suckers at Cerberus. Instead it hung on and on and on, eventually getting way less than it could have, then still not having the brains to get rid of it all.

Who was stupider? Cerberus for getting involved, or GM for not having the common sense to dump the whole thing? By the way, this is not 20-20 hindsight. I recommended GM to unload GMAC (all of it) years ago.

The rescue plan for ResCap may also include selling interests in mortgage securitizations, loans secured by time- shares and loan portfolios in the U.K. and Europe, GMAC said.

Failure to complete the plan "would have a material adverse effect on our business, results of operations and financial position," GMAC said. The mortgage unit posted about $5.3 billion in losses over the past six quarters.

ResCap reported an $859 million first-quarter loss last week, erasing GMAC's profit from its auto-finance subsidiary. The results renewed doubt about ResCap's survival, and credit-rating firms say GMAC may harm itself by continuing to support the money-losing subsidiary.
My Comment: There is no rescue plan for ResCap that can possibly work.

ResCap said on May 2 that it is seeking a $3.5 billion loan from GMAC as part of a bigger financing agreement. GM Chief Operating Officer Fritz Henderson said in February, when he was still GM's chief financial officer, that the automaker might consider more support for GMAC if its former unit fell significantly short of a forecast for a 2008 profit. GMAC has since said it may not make money this year.
My Comment: If GM is stupid enough to give ResCap $3.5 Billion, then GM can kiss it all goodbye. That GM is even considering this is a testimonial to the willingness of GM to piss away more money.

Gimme Credit analyst Kathleen Shanley said in a report last week that Minneapolis-based ResCap was on "deathwatch" because it can't pay debt due in 2008. Today, she wrote that ResCap may be better off in bankruptcy so a court could determine how the incoming funds are being used. As it stands, GMAC and Cerberus are providing forms of secured financing "that put the owners of ResCap ahead of its bondholders," she wrote.
 

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Re: GM about to Throw away More Money

http://seekingalpha.com/article/76529-gm-about-to-throw-away-more-money?source=yahoo


I remain surprised that GM is still in business. It loses money on cars, on financing, and it is behind the curve on a transition away from SUVs. GM is the walking dead, a true Zombie corporation.

Now I see that GM, Cerberus May Pledge $750 Million to ResCap Rescue.

General Motors Corp. and Cerberus Capital Management LP may agree to guarantee part of a $3.5 billion debt package designed to help GMAC LLC's Residential Capital unit avert bankruptcy.

GM, the world's biggest automaker, and Cerberus, the New York-based private-equity firm, may pay debt holders as much as $750 million if ResCap defaults, GMAC said in a filing today. The cost would be split by the two firms according to their stakes in GMAC, the Detroit-based auto and home lender said. GM sold 51 percent of GMAC to Cerberus-led investors in 2006.

The accord would mark a reversal for GM, which has said it has no obligation to support ResCap after the GMAC unit was battered by subprime mortgage losses. ResCap ranked among the 10 biggest U.S. mortgage lenders last year. The new arrangement is part of a financial plan that should provide enough liquidity for 12 months, GMAC said.

"It's good for GMAC in that it shows support for a troubled operation and it suggests the strategic importance of the unit," said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, Tennessee. "It remains to be seen how far they will go."
My Comment: There is no strategic importance of GMAC. If there was, why did GM sell 51% of it? More to the point, GM had a chance to unload the whole shebang to a bunch of complete suckers at Cerberus. Instead it hung on and on and on, eventually getting way less than it could have, then still not having the brains to get rid of it all.

Who was stupider? Cerberus for getting involved, or GM for not having the common sense to dump the whole thing? By the way, this is not 20-20 hindsight. I recommended GM to unload GMAC (all of it) years ago.

The rescue plan for ResCap may also include selling interests in mortgage securitizations, loans secured by time- shares and loan portfolios in the U.K. and Europe, GMAC said.

Failure to complete the plan "would have a material adverse effect on our business, results of operations and financial position," GMAC said. The mortgage unit posted about $5.3 billion in losses over the past six quarters.

ResCap reported an $859 million first-quarter loss last week, erasing GMAC's profit from its auto-finance subsidiary. The results renewed doubt about ResCap's survival, and credit-rating firms say GMAC may harm itself by continuing to support the money-losing subsidiary.
My Comment: There is no rescue plan for ResCap that can possibly work.

ResCap said on May 2 that it is seeking a $3.5 billion loan from GMAC as part of a bigger financing agreement. GM Chief Operating Officer Fritz Henderson said in February, when he was still GM's chief financial officer, that the automaker might consider more support for GMAC if its former unit fell significantly short of a forecast for a 2008 profit. GMAC has since said it may not make money this year.
My Comment: If GM is stupid enough to give ResCap $3.5 Billion, then GM can kiss it all goodbye. That GM is even considering this is a testimonial to the willingness of GM to piss away more money.

Gimme Credit analyst Kathleen Shanley said in a report last week that Minneapolis-based ResCap was on "deathwatch" because it can't pay debt due in 2008. Today, she wrote that ResCap may be better off in bankruptcy so a court could determine how the incoming funds are being used. As it stands, GMAC and Cerberus are providing forms of secured financing "that put the owners of ResCap ahead of its bondholders," she wrote.
I guess they think they will get the money back in better times.
 

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Re: GM about to Throw away More Money

I can't help but wonder if this money wouldn't be better spent putting the now-cancelled Ultra V-8 into production to use in the DT7 and others. Didn't GM lose their shirt with Hughes and other non car-related "ventures"? Imagine the quality cars they could have built in the 80's and 90's had their attention and money been allocated to CARS vs. off-the-wall peripheral businesses?
 

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Re: GM about to Throw away More Money

I can't help but wonder if this money wouldn't be better spent putting the now-cancelled Ultra V-8 into production to use in the DT7 and others. Didn't GM lose their shirt with Hughes and other non car-related "ventures"? Imagine the quality cars they could have built in the 80's and 90's had their attention and money been allocated to CARS vs. off-the-wall peripheral businesses?
Thank you, Roger Smith, for that non-core buying spree. Imagine the possibilities if that jackass hadn't been in charge...
 

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Re: GM about to Throw away More Money

Im getting worried about all this money 750 million for Rescap some extra millions to end the axle strike Im really worried because GM doesnt have anything else to sell, whats next sell hummer and saab
 

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Re: GM about to Throw away More Money

Im getting worried about all this money 750 million for Rescap some extra millions to end the axle strike Im really worried because GM doesnt have anything else to sell, whats next sell hummer and saab
And don't forget the $600+ million to buy the RenCenter Headquarters in Detroit. GM will probably end up selling it in 3 years for $300 million to provide funding, negotiated into the next contract, for the UAW strike fund that was partially depleted this year (with all the locals & American axle)
 

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Re: GM about to Throw away More Money

Thank you, Roger Smith, for that non-core buying spree. Imagine the possibilities if that jackass hadn't been in charge...
Yes indeed, plus before retiring with a HUGE pension after laying off vast numbers of workers, he killed the Voyage and Solitaire Cadillacs that HAD been earmarked for production and that could have brought glory days back to that division. To this day his name makes me wince.
 

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Re: GM about to Throw away More Money

a disupointing 86% on that kwiz K-1 yer"e the bestest
 

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Re: GM about to Throw away More Money

Gees! 200 million here, 750 there, soon you're starting to talk about real money!:yup:
 

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they're happy in the hallowed halls of the Ren Cen...more "Red Ink" for Rick.
 

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Re: GM about to Throw away More Money

Any point this guy was trying to make just went right out the window with that inane bit of "journalism."
Just look at what he posts up and how he does it
 

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When GM should 50% of GMAC to Cerberus to raise money, everyone was raising an eye bow, saying that GM shouldn't had sold it's most valuable asset. Now with the number of foreclosures and liquidity problems, GMAC declared a loss for 2008. Maybe GM was thinking about the future, or needed to raise capital quick, but in the long run it was a good move. However, there was an option to re-purchase GMAC again when the economy starts to rebound.
 
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