Jones Lang LaSalle
UPDATE: Investor Trio Takes 78% of GMACCH for $9B
By Marita Thomas
Last updated: March 23, 2006 01:12pm
HORSHAM, PA-As planned, an investor group led by affiliates of Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC and Goldman Sachs Capital Partners completed its acquisition of a majority interest in GMAC Commercial Holding Corp. from locally based GMAC, which is General Motors’ financial services subsidiary. The partnership takes a 78% stake--up from its previously announced 60% stake--in a deal valued at in excess of $8.8 billion. A name-change from GMACCH to Capmark Financial Group Inc. is expected to be implemented in the second quarter of this year.
Under the terms of the agreement, the investment group is paying GMACCH more than $1.5 billion in cash and also repaying GMACCH’s inter-company $7.3-billion debt to GMAC. At the same time, Capmark closed on a loan facility of nearly $10.8 billion with a syndicate of banks, which provides it with an intermediate and long-term debt-funding base.
The closing comes a day after GM offered to finance early-retirement packages and buyouts to its 105,000 union-represented employees, which followed its reported loss of $10.6 billion in 2005. When GM’s credit rating sank in 2005, so did GMAC’s. When GlobeSt.com first exclusively reported news of the investment group’s offer to buy a major stake in GMACCH in August 2005, Chris Wolfe of Fitch Ratings told GlobeSt.com that Fitch’s downgrade related only to GM’s performance and was negatively impacting the mortgage subsidiary’s access to capital. The sale of GMACCH would give it a stand-alone rating.
On today’s news of the GMACCH acquisition, Fitch Ratings initiated a BBB long-term, and F3 short-term rating on Capmark and said the rating outlook is stable. In a statement, Fitch said the ratings "reflect Capmark’s strong and growing franchise in all facets of commercial mortgage banking, experience management team and sound level of core earnings." The F3 rating, it said, "reflects Capmark’s historical reliance on short-term sources of financing [which] Fitch believes…will be reduced as Capmark establishes itself in the capital markets." The statement also said that as this happens it will review the short-term rating "with a view towards an upgrade."
"With investment grade ratings from the three primary rating agencies and enhanced access to the capital markets, Capmark is poised to fully realize the opportunities that exist for each of its businesses," said Robert D. Feller, CEO of GMACCH, who is retaining that position with Capmark. Dennis Dammerman, a former vice chairman of General Electric and chairman and CEO of GE Capital Corp., is the newly appointed chairman of Capmark.
GMAC chairman Eric Feldstein and David Walker, CFO of GMAC Mortgage Group, will hold two seats on Capmark’s 15-member board, a GMAC spokesman tells GlobeSt.com. According to him and a spokesperson for KKR, the Capmark board will also include Nino Fanlo, CEO of KKR Financial Corp., KKR principal Tagar Olson, and KKR member Scott Nuttal; Five Mile Capital principals Chip Kruger, Steve Baum and Tom Kendall; Steve Trevor, a partner with Goldman Sachs Capital Partners; Peter Bechen, CEO of Pacific Realty Trust; and Daniel Neidich, chairman and CEO of Dune Capital Management.
At the close of sale, members of Capmark’s management team will acquire a 4% stake while GMAC retains a stake of approximately 21%. GMAC will invest an additional $250 million in Capmark trust preferred stock. The transaction will provide "improved access to cost-efficient funding," Felsdstein says in a statement. "We are expecting strong returns on the significant investment that GMAC will retain in this business." The Capmark loan servicing portfolio totals approximately $276 billion.
In October 2005, Rick Wagoner, GM’s chairman and CEO, said GM was "exploring options to further enhance GMAC’s liquidity position." The options included the potential sale of a controlling interest in GMAC, and the GMAC spokesman tells GlobeSt.com, "that investigation is unrelated to the GMACCH transaction and is ongoing."
UPDATE: Investor Trio Takes 78% of GMACCH for $9B
By Marita Thomas
Last updated: March 23, 2006 01:12pm
HORSHAM, PA-As planned, an investor group led by affiliates of Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC and Goldman Sachs Capital Partners completed its acquisition of a majority interest in GMAC Commercial Holding Corp. from locally based GMAC, which is General Motors’ financial services subsidiary. The partnership takes a 78% stake--up from its previously announced 60% stake--in a deal valued at in excess of $8.8 billion. A name-change from GMACCH to Capmark Financial Group Inc. is expected to be implemented in the second quarter of this year.
Under the terms of the agreement, the investment group is paying GMACCH more than $1.5 billion in cash and also repaying GMACCH’s inter-company $7.3-billion debt to GMAC. At the same time, Capmark closed on a loan facility of nearly $10.8 billion with a syndicate of banks, which provides it with an intermediate and long-term debt-funding base.
The closing comes a day after GM offered to finance early-retirement packages and buyouts to its 105,000 union-represented employees, which followed its reported loss of $10.6 billion in 2005. When GM’s credit rating sank in 2005, so did GMAC’s. When GlobeSt.com first exclusively reported news of the investment group’s offer to buy a major stake in GMACCH in August 2005, Chris Wolfe of Fitch Ratings told GlobeSt.com that Fitch’s downgrade related only to GM’s performance and was negatively impacting the mortgage subsidiary’s access to capital. The sale of GMACCH would give it a stand-alone rating.
On today’s news of the GMACCH acquisition, Fitch Ratings initiated a BBB long-term, and F3 short-term rating on Capmark and said the rating outlook is stable. In a statement, Fitch said the ratings "reflect Capmark’s strong and growing franchise in all facets of commercial mortgage banking, experience management team and sound level of core earnings." The F3 rating, it said, "reflects Capmark’s historical reliance on short-term sources of financing [which] Fitch believes…will be reduced as Capmark establishes itself in the capital markets." The statement also said that as this happens it will review the short-term rating "with a view towards an upgrade."
"With investment grade ratings from the three primary rating agencies and enhanced access to the capital markets, Capmark is poised to fully realize the opportunities that exist for each of its businesses," said Robert D. Feller, CEO of GMACCH, who is retaining that position with Capmark. Dennis Dammerman, a former vice chairman of General Electric and chairman and CEO of GE Capital Corp., is the newly appointed chairman of Capmark.
GMAC chairman Eric Feldstein and David Walker, CFO of GMAC Mortgage Group, will hold two seats on Capmark’s 15-member board, a GMAC spokesman tells GlobeSt.com. According to him and a spokesperson for KKR, the Capmark board will also include Nino Fanlo, CEO of KKR Financial Corp., KKR principal Tagar Olson, and KKR member Scott Nuttal; Five Mile Capital principals Chip Kruger, Steve Baum and Tom Kendall; Steve Trevor, a partner with Goldman Sachs Capital Partners; Peter Bechen, CEO of Pacific Realty Trust; and Daniel Neidich, chairman and CEO of Dune Capital Management.
At the close of sale, members of Capmark’s management team will acquire a 4% stake while GMAC retains a stake of approximately 21%. GMAC will invest an additional $250 million in Capmark trust preferred stock. The transaction will provide "improved access to cost-efficient funding," Felsdstein says in a statement. "We are expecting strong returns on the significant investment that GMAC will retain in this business." The Capmark loan servicing portfolio totals approximately $276 billion.
In October 2005, Rick Wagoner, GM’s chairman and CEO, said GM was "exploring options to further enhance GMAC’s liquidity position." The options included the potential sale of a controlling interest in GMAC, and the GMAC spokesman tells GlobeSt.com, "that investigation is unrelated to the GMACCH transaction and is ongoing."
posted by Jones Lang LaSalle NJ News Blog at 10:18 AM
<< Home