NEW YORK -- General Motors' restructuring plan should boost the automaker's prospects for selling a majority stake in financial services subsidiary General Motors Acceptance Corp., analysts said on Tuesday.
GM said last month it was exploring the sale of a controlling interest in GMAC; analysts say such a sale could fetch between $10 billion and $15 billion. The company hopes a sale would lift GMAC's credit rating back to investment grade and restore its access to low-cost financing.
Prior to the restructuring plan, revealed on Monday, speculation had built that GM's other option was to file for bankruptcy, a move that could derail plans to sell the lucrative GMAC.
If GM took the bankruptcy route, GMAC suitors would sense desperation and offer low-ball prices, said Commerzbank credit analyst Philip Watkins -- if they made any offers at all.
But Monday's restructuring announcement, which calls for slashing 30,000 North American manufacturing jobs and closing all or part of a dozen plants in the next three years, quelled speculation of a hasty fire sale for GMAC, Watkins said, and improved the chances of prospective buyers paying top dollar for the GMAC stake.
"GM ... commented that though any transaction would be complex, that current market turbulence surrounding GM had not had an impact on its discussions regarding selling GMAC," Watkins said in a research note.
GM's Chief Executive Richard Wagoner did say, in remarks to reporters on Monday, that GMAC deal discussions were moving along quickly and that he was pleased with the interest levels. But he cautioned that there is no sale guarantee.
"It is far from certain that a deal will get done because it's a complex transaction," Wagoner said. "I can't give you a specific time frame. I'll just tell you it's working it's way through as expeditiously as we can possibly do it."
Despite Wagoner's caution, other analysts were optimistic about GM's ability to sell control of GMAC.
"On the theory that the restructuring will help GM get out of the red, this strengthens their ability to do a deal," said Burnham Securities analyst David Healy.
WHO IS IN LINE?
Besides selling automotive financing, GMAC provides commercial finance, insurance and mortgage products as well as real estate services.
Large financial institutions with deep pockets and good credit ratings would appear to have the edge in taking over GMAC.
CreditSights analyst David Hendler has said the financial groups interested in controlling GMAC or its ResCap residential mortgage business could include Citigroup, JPMorgan Chase & Co., Wachovia Corp., ABN AMRO and HSBC Holdings Plc as well as Bank of America Corp.
General Electric Co.'s GE Consumer Finance has also been named as a potential buyer.
But to date, no GMAC suitor has come forward publicly.
"There has been speculation that fears about a GM bankruptcy could delay a sale," said a report from independent corporate bond research firm GimmeCredit, citing the legal mess that would follow. "But GM is essentially selling GMAC via a public auction, so plaintiffs would have a hard time arguing that GM didn't receive a fair price."