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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 10, 2006
(Date of report; date of
earliest event reported)
Commission file number: 1-3754
GENERAL MOTORS ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-0572512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Renaissance Center
P.O. Box 200 Detroit, Michigan
48265-2000
(Address of principal executive offices)
(Zip Code)
(313) 556-5000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 8.01 Other Events
On April 2, 2006, General Motors Corporation ("GM") and its wholly owned
subsidiaries General Motors Acceptance Corporation, a Delaware corporation
("GMAC" or the "Company"), and GM Finance Co. Holdings Inc., a Delaware
corporation ("Holdco"), entered into a Purchase and Sale Agreement (the
"Agreement") with FIM Holdings LLC, a Delaware limited liability company
("Purchaser"), pursuant to which GM will sell to Purchaser common limited
liability company interests of GMAC representing 51% of the common limited
liability company interests of GMAC (following its conversion to limited
liability company form) upon the terms and subject to the conditions set forth
in the Agreement (the "Acquisition"). Subject to the satisfaction or waiver of
the various closing conditions, GM expects that the Acquisition will be
completed in the fourth quarter of 2006, at which time the dividend policy of
the Company is expected to be as described below, unless otherwise agreed by GM
and the Purchaser.
o The Company will distribute to GM and the Purchaser, as the holders of the
preferred membership interests in the Company, the accrued 10% yield for the
immediately preceding quarter based on the number of preferred membership
interests held by each. (GM will acquire $1.555 billion in preferred
membership interests from the Company at Closing at a 10% discount, or a cash
cost of $1.4 billion.)
o Prior to the second anniversary of the closing date, at least 40% and, from
and after the second anniversary of the closing date, at least 70%, of the
excess of (A) the earnings of the Company and its subsidiaries generated in
any fiscal quarter over (B) the amount of yield distributed to the holders of
the preferred membership interests in such fiscal quarter as described above
will be distributed to the members of the Company pro rata in accordance with
the number of common membership interests held by each holder. Forty percent
roughly approximates the income tax expense that would be attributable to GM
and the Purchaser, although GM is not expected to have to use such
distribution to pay actual cash income taxes in the near term. In years three
through five following the Acquisition, Purchaser will reinvest cash
distributions it receives, at least attributable to the indirect interest of
Cerberus Capital Management, L.P. in the Company, in excess of 40% into
additional preferred membership interests of the Company.
o The board of directors of the Company could, with the consent of GM, reduce
any distribution below that described above. In addition, the board of
directors of the Company could, without the consent of GM, reduce any
distribution below that described above to the extent required to avoid a
reduction of the equity capital of the Company below an agreed minimum capital
amount (approximately net book value at closing).
o The board of directors of the Company could increase any distribution
described above, provided, that if such a distribution would be reasonably
likely to result in a credit downgrade of any unsecured indebtedness of the
Company or certain subsidiaries or a negative change in the outlook of such
credit rating of the Company or such subsidiaries, such distribution would
require the approval of at least a majority of the independent directors of
the Company.
o In any event, any distribution that would reduce the equity capital below the
required minimum capital amount would require the approval of at least a
majority of the independent directors of the Company.
If the Acquisition is completed, GM and GMAC will enter into a number of
agreements that will require that GMAC continue to allocate capital to provide
financing to GM customers and wholesale dealers in accordance with historical
practice. While GMAC will retain the right to make individual credit decisions,
GMAC will commit to fund a broad credit spectrum of customers and dealers
consistent with historical practice in the relevant jurisdiction. In the U.S.
and Canada, GMAC will continue to purchase retail lease contracts, and upon
remarketing of the leased vehicles at the end of the lease, GMAC will continue
to be responsible for 50% of the difference between the resale proceeds and the
adjusted Automotive Lease Guide value (known as lease risk sharing). Subject to
GMAC's fulfillment of certain conditions, GM will grant GMAC exclusivity for 10
years for U.S., Canadian, and international GM-sponsored retail and wholesale
marketing incentives.
The transaction is expected to reduce GMAC's cost of funds as GMAC's ratings are
delinked from GM's and improve over time. Under the agreements, GM will directly
benefit from GMAC's lower cost of funds. In the U.S., GMAC will pay GM
$75 million annually to be the exclusive provider of incentives relating to
retail financing. The amount and timing of rate support paid by GM to GMAC are
not expected to be materially different from historic practice. GM will pay
estimated residual support on lease contracts at lease inception. GMAC will
continue to have access to GM trademarks, but going forward GMAC will pay GM a
royalty of 3.25% of GMAC's revenue from the sale of contracts for the GM
Protection Plan and GM Motor Club. The royalty fees are expected to total
approximately $25 million annually, but in no event will the fees be less than
$15 million annually.
Forward-Looking Statements
In this report and in related comments by management of GMAC our use of the
words "expect," "anticipate," "estimate," "forecast," "initiative," "objective,"
"plan," "goal," "project," "outlook," "priorities," "target," "intend,"
"evaluate," "pursue," "seek," "may," "would," "could," "should," "believe,"
"potential," "continue," "designed," "impact," or the negative of any of those
words or similar expressions is intended to identify forward-looking statements.
While these statements represent our current judgment on what the future may
hold, and we believe these judgments are reasonable when made, these statements
are not guarantees of any events or financial results, and GMAC's actual results
may differ materially due to numerous important factors that may be revised or
supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors
include, among others, the following:
o The ability of GM to complete a transaction regarding a controlling interest
in GMAC while maintaining a significant stake in GMAC, securing separate
credit ratings and low cost funding to sustain growth for GMAC and ResCap,
and maintaining the mutually beneficial relationship between GMAC and GM;
o Significant changes in the competitive environment and the effect of
competition in GM's markets, including on GM's pricing policies;
o Our ability to maintain adequate financing sources;
o Our ability to maintain an appropriate level of debt;
o The profitability and financial condition of GM, including changes in
production or sales of GM vehicles, risks based on GM's contingent benefit
guarantees and the possibility of labor strikes or work stoppages at GM or at
key suppliers such as Delphi;
o Funding obligations under GM and its subsidiaries' qualified U.S. defined
benefits pension plans;
o Restrictions on ResCap's ability to pay dividends and prepay subordinated debt
obligations to us;
o Changes in the residual value of off-lease vehicles;
o Changes in U.S. government-sponsored mortgage programs or disruptions in the
markets in which our mortgage subsidiaries operate;
o Changes in our contractual servicing rights;
o Costs and risks associated with litigation;
o Changes in our accounting assumptions that may require or that result from
changes in the accounting rules or their application, which could result in
an impact on earnings;
o Changes in the credit ratings of GMAC or GM;
o The threat of natural calamities;
o Changes in economic conditions, currency exchange rates or political stability
in the markets in which we operate; and
o Changes in the existing, or the adoption of new, laws, regulations, policies
or other activities of governments, agencies and similar organizations.
Investors are cautioned not to place undue reliance on forward-looking
statements. GMAC undertakes no obligation to update publicly or otherwise revise
any forward-looking statements, whether as a result of new information, future
events or other such factors that affect the subject of these statements, except
where expressly required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS ACCEPTANCE CORPORATION
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(Registrant)
Dated: April 10, 2006 /s/ SANJIV KHATTRI
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Sanjiv Khattri
Executive Vice President,
Chief Financial Officer and Director
Dated: April 10, 2006 /s/ LINDA K. ZUKAUCKAS
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Linda K. Zukauckas
Vice President and Corporate Controller