GMAC Financial Services' new era as independent firm.

GMAC Financial Services opened its doors last week as an independent global financial services company after 87 years as a wholly owned subsidiary of General Motors Corp.

GM completed the sale of a majority equity stake in GMAC to an investment consortium led by Cerberus FIM Investors, LLC and including wholly owned subsidiaries of Citigroup, Inc., Aozora Bank  Ltd. and The PNC Financial Services Group, Inc.

As a result of this transaction, GMAC expects to benefit from access to a lower cost of funds as it assumes a separate and independent credit profile and independent governance by a new board.

In addition, GM and GMAC have entered into 10-year agreements under which GMAC will remain the exclusive provider of GM-sponsored auto finance programs and will continue to provide GM dealers and their customers with the same broad range of financial products and services as it does today.

GMAC's existing management team will remain in place and is led by chief executive officer Eric Feldstein, president William Muir, and chief financial officer Sanjiv Khattri.

"GMAC has had tremendous success--more than $9.4 billion of net income since the beginning of 2003--during a time when our credit ratings were under pressure and our access to capital was constrained," said Feldstein. "This accomplishment reflects the consistently strong operating results of our core business units despite the funding challenges we encountered."

GMAC has established itself as a Top 10 participant in real estate finance with nine consecutive years of market share growth. The company has a superior asset origination capability--more than $60 billion per year just in the auto segment--and a world-class servicing capability in both auto and mortgage.

"The prospects for GMAC look quite promising as we now combine our existing business strengths with improved credit ratings, a more competitive cost of funds, and a strengthened capital base to support profitable growth," Feldstein said.

The company's new 13-member board was named. The board includes independent members as well as representatives from the Cerberus-led consortium and GM. Ezra Merkin, a managing partner with Gabriel Capital Group, has been named non-executive chairman of the GMAC Board.

The consortium, which will hold a 51-percent interest in GMAC, is committed to a long-term investment horizon through a five-year minimum hold period. Cerberus has also committed to reinvest all of its after-tax distributions into GMAC preferred stock in years 3-5 after closing.

"Cerberus Capital and the investor consortium are committed to a long-term partnership that will bring sustained growth, diversity of product offerings and lasting benefits to GMAC," said Mark Neporent, Cerberus' chief operating officer and senior managing director.

"We're committed to helping GMAC compete even more effectively and continuing its tradition of strong growth and success. Cerberus has great confidence and respect for the people of GMAC and we look forward to the continued success of GMAC as an independent company."

GMAC's capital base has been bolstered by $1.9 billion through its issuance of preferred equity to GM ($1.4 billion) and Cerberus ($500 million). The company's previously announced $10 billion asset-backed facility, arranged through Citibank, will offer an additional source of liquidity. Strengthened by the company's new ownership and independent governance structure, GMAC expects improved credit ratings will lead to lower-cost funding.

"Today marks an exciting new era for GMAC. Our improved capital position and credit profile enable us to play offense again," said Feldstein.

"With a global franchise spanning nearly 40 countries, and world-class asset origination and servicing capabilities, GMAC is well positioned to generate increasing revenue at higher returns across all of our businesses long-term."