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21.11.2007 – 19:31

GMAC Financial Services

ResCap Commences Cash Tender Offer for US$750 Million Aggregate Principal Amount of its Outstanding Debt Securities

Minneapolis, November 21 (ots/PRNewswire)

Residential Capital, LLC (ResCap) today announced that it has
commenced a cash tender offer for its debt securities listed in the
table below (the notes). ResCap is offering to purchase up to US$750
million aggregate principal amount (the maximum tender amount) of the
notes, upon the terms and subject to the conditions set forth in its
Offer to Purchase, dated Nov. 21, 2007 and the related Letter of
Transmittal. The tender offer will expire at 12:00 midnight EST on
Dec. 19, 2007, unless extended or earlier terminated by ResCap in its
sole discretion (the expiration time).
The total consideration for each US$1,000 principal amount of
notes validly tendered and accepted for purchase pursuant to the
tender offer will be the applicable total consideration in the table
below (in each case, the total consideration). Subject to the terms
and conditions of the tender offer, notes tendered will be accepted
for purchase in a specified acceptance priority. The table below
shows, among other things, the series of notes subject to the tender
offer, the acceptance priority and the total consideration for each
series of notes:
    Security            Principal       Early      Acceptance    Per US$1,000
                          Amount        Tender      Priority     Principal
                        Outstanding     Premium(1)   Level         Amount
    Floating Rate    US$1,250,000,000     US$30        1           US$830
    Notes Due
    June 9, 2008
    Floating Rate      US$500,000,000     US$30        2           US$760
    Notes Due
    21, 2008 (2)
    6.125% Notes       US$750,000,000     US$30        3           US$760
    Due November
    21, 2008 (2)
    Subordinated     US$1,000,000,000     US$30        4           US$500
    Floating Rate
    Notes Due April
    17, 2009 (2,3)
    1. Per US$1,000 principal amount of notes.
    2. Listed on the Luxembourg Stock Exchange.
    3. Notes are currently callable at par.
Holders must tender their notes prior to 5:00 p.m. EST on Dec. 5,
2007 (unless extended or earlier terminated, the early tender time),
in order to be eligible to receive the total consideration, which
includes an early tender premium of US$30 per US$1,000 principal
amount of notes purchased. Holders that validly tender their notes
after the early tender time but prior to the expiration time will be
eligible to receive the total consideration less the early tender
premium, which amount we refer to as the tender offer consideration.
In addition, in each case, holders whose notes are accepted for
purchase by ResCap, will also receive accrued and unpaid interest on
such notes from the last interest payment date for the applicable
series of notes to, but not including, the settlement date. The
settlement date with respect to the notes is the date on which ResCap
will pay the total consideration or tender offer consideration, as
applicable, in respect of the notes accepted for purchase. The
settlement date is expected to be the first New York City business
day following the expiration time.
Subject to applicable law, ResCap may, with respect to any or all
series of notes: (i) extend or otherwise amend the early tender time
or the expiration time, or (ii) increase the maximum tender amount
without extending the withdrawal deadline or otherwise reinstating
withdrawal rights of holders. In the event of a termination of the
tender offer with respect to any series of notes, all notes of such
series tendered pursuant to the tender offer will be promptly
returned to the tendering holders. ResCap will (subject to the terms
and conditions of the tender offer) accept notes based on the
acceptance priorities and will pro-rate the notes purchased as set
forth in the Offer to Purchase. Except as set forth in the Offer to
Purchase or as required by applicable law, notes tendered prior to
5:00 p.m. EST on Dec. 5, 2007 (the withdrawal deadline) may only be
withdrawn in writing before the withdrawal deadline, and notes
tendered after the withdrawal deadline but before the expiration time
may not be withdrawn.
The tender offer is conditioned on the satisfaction of certain
conditions. If any of the conditions are not satisfied or waived,
ResCap is not obligated to accept for payment, purchase or pay for,
and may delay the acceptance for payment of, any tendered notes, in
each event, subject to applicable laws, and may terminate the tender
Banc of America Securities LLC and Citi are the dealer managers
for the tender offer. Global Bondholder Services Corporation is the
information agent and depositary. Deutsche Bank Luxembourg S.A. is
the Luxembourg tender agent for the tender offer. Persons with
questions regarding the tender offer should contact the dealer
managers: Banc of America Securities LLC toll-free at +1-866-475-9886
or collect at +1-704-386-3244 and Citi toll-free at +1-800-558-3745
or collect at +1-212-723-6106, or the information agent, toll-free at
Net Worth Covenant Compliance
As previously reported, several of ResCap's credit facilities
contain a financial covenant requiring ResCap to maintain a minimum
consolidated tangible net worth as of the end of each fiscal quarter.
As of Sept. 30, 2007, the most restrictive provision requires ResCap
to maintain a minimum consolidated tangible net worth of US$5.4
billion. ResCap's reported consolidated tangible net worth as of
Sept. 30, 2007, was US$6.2 billion.
The purchase of the notes in this tender offer at a discount and
the retirement of the notes will increase ResCap's income in the
fourth quarter of 2007 and its consolidated tangible net worth as of
the end of the year above the levels that would have occurred in the
absence of acquiring notes pursuant to the tender offer.
Management of GMAC Financial Services (GMAC) currently intends to
take steps, to the extent necessary, to cause ResCap to be in
compliance with all of the consolidated tangible net worth covenants
contained in its credit facilities as of Dec. 31, 2007, subject to
approval of GMAC's board of directors. Among the steps that GMAC's
management intends to recommend is, to the extent necessary, a
capital contribution to ResCap. There can be no assurances, however,
that GMAC's board will authorize such a capital contribution or any
other actions, or that such a capital contribution will actually be
During this tender offer, GMAC may purchase ResCap notes in open
market transactions, other than those that are the subject of this
tender offer. Thereafter, GMAC may contribute notes that it purchases
to ResCap as part of any capital contribution. Following the tender
offer, GMAC also may purchase ResCap notes, including those that are
the subject of this tender offer and are outstanding following this
tender offer, in open market purchase transactions or otherwise.
Strategic Initiatives
As previously reported, GMAC and ResCap continue to investigate
strategic alternatives for a variety of reasons, including to improve
ResCap's liquidity and to adjust its business in light of current
domestic and international market conditions. These strategic
alternatives include potential acquisitions as well as dispositions,
alliances, and joint ventures with a variety of third parties with
respect to some or all of ResCap's businesses. GMAC and ResCap are in
various stages of discussions with respect to certain of these
alternatives, including, in some cases, execution of confidentiality
agreements, indications of interest and other exploratory activities
such as preliminary due diligence and conceptual discussions.
Recently, GMAC and ResCap also have engaged advisers to explore the
sale of certain parts of ResCap's operations. There are currently no
substantive binding contracts, agreements or understandings with
respect to any particular transaction. Further, there can be no
assurances that any of these strategic alternatives will occur, or
that even if they do, they will achieve their anticipated benefits.
One substantial transaction currently under consideration includes
GMAC's recent submission of a second-round non-binding indication of
interest to acquire a large non-U.S. mortgage lending institution. If
it were successful in making such an acquisition, GMAC's current
intention would be to integrate ResCap's local mortgage business with
the acquired institution. Other interested parties are actively
pursuing the same acquisition and there can be no assurance that GMAC
will be successful in consummating a transaction for all or part of
such institution.
Certain On-Balance Sheet Assets
ResCap actively manages risks associated with its balance sheet.
As disclosed in ResCap's Form 10-Q for the period ending Sept. 30,
2007, the balance sheet includes the consolidation of certain
securitization trusts that primarily include mortgage loans held for
investment and related collateralized borrowings. The investors in
these securitization trusts have no recourse to ResCap's other assets
beyond the assets inside the securitization trusts. At Sept. 30,
2007, total assets, after allowance for loan losses, relating to
on-balance sheet securitization trusts totaled US$38.6 billion while
the related total liabilities of the on-balance sheet securitization
trusts were US$37.9 billion. If every mortgage loan underlying these
on-balance sheet securitizations were deemed to be completely
uncollectable, ResCap would incur an economic loss of approximately
US$0.7 billion (or 2 percent of the total assets after allowance for
loan losses). In addition, ResCap's balance sheet includes
unsecuritized mortgage loans in its held for investment portfolio. As
of Sept. 30, 2007, this portfolio of unsecuritized mortgage loans was
US$21.7 billion, prior to the allowance for loan losses, of which
approximately US$4.1 billion consisted of nonprime mortgage loans.
This release is for informational purposes only and is neither an
offer to purchase nor a solicitation of an offer to sell the notes.
The offer to buy the notes is only being made pursuant to the tender
offer documents, including the Offer to Purchase and the related
Letter of Transmittal that ResCap is distributing to holders of
notes. The tender offer is not being made to holders of notes in any
jurisdiction in which the making or acceptance thereof would not be
in compliance with the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction in which the securities laws or
blue sky laws require the tender offer to be made by a licensed
broker or dealer, the tender offer will be deemed to be made on
behalf of ResCap by one or more of the dealer managers, or one or
more registered brokers or dealers that are licensed under the laws
of such jurisdiction.
Residential Capital, LLC ( is a
leading real estate finance company, focused primarily on the
residential real estate market in the United States, Canada, Europe,
Latin America and Australia. ResCap's diversified businesses --
GMAC-RFC, GMAC Mortgage, ditech, and Homecomings Financial -- cover
the spectrum of the U.S. residential finance industry, from
origination and servicing of mortgage loans through their
securitization in the secondary market. It also provides capital to
other originators of mortgage loans, residential real estate
developers and resort and timeshare developers. Residential Capital,
LLC is an indirect wholly owned subsidiary of GMAC Financial
Web site:


Gina Proia, +1-917-369-2364,; or Toni
Simonetti, +1-917-369-2360,, both of GMAC
Financial Services