ResCap exchanges $1.2 billion notes owned by GMAC for preferred units

New York, April 4 - Residential Capital, LLC said it exchanged $1.2 billion principal amount of its notes owned by GMAC LLC with a fair value of $607.192 million for 607,192 ResCap preferred units with a liquidation preference of $1,000 per unit.

GMAC had bought the $1.2 billion of notes in open market transactions. ResCap has cancelled the notes. The transaction was completed on March 31.

GMAC may contribute up to $340 million more of ResCap notes with a fair value of $265.779 million for additional preferred units.

The preferreds are perpetual and pay a distribution of 13% quarterly, if authorized by the board. While ResCap is not allowed to make distributions on its common membership interests if any preferred distributions have not been paid, the company is currently prohibited from making distributions on any of its membership interests by the terms of its operating agreement with GMAC. Distributions on the preferreds are not cumulative.

ResCap can redeem the preferreds on any distribution payment date at the liquidation preference.

GMAC can exchange the preferreds into preferred membership interests in IB Financing Holdings, LLC starting on Jan. 1, 2009. IB Finance owns GMAC Bank, an industrial loan corporation.

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