Some Good News for GMAC -- Just a Little, Though

Finally, a little bit of good news for GM dealers. According to a SEC filing this afternoon, GM is allowing GMAC to defer, until December 30, payment up to $1.5 billion on vehicles shipped to dealers for which it provides floor plan financing.

Under normal conditions, GMAC pays GM the invoice price of the vehicle on the first business day following shipment. The move should enable dealers to order more vehicles and help GMAC finance a few more sales before the end of year.

Last month, GMAC financed only 1% of all of GM sales. A year ago, it was almost 70%.

GMAC, hurt by the mortgage collapse, will finance only those customers with credit scores of 700 or higher. And it's been tightening the screws on dealers' floor plan financing. Many dealers have been forced out of business because of the stricter policies.

December 26 is a critical date for the finance firm. The company wants to submit an application to secure bank status, allowing it to be eligible for TARP funds. Before it can submit the application, GMAC has to convince bondholders to agree to a debt swap of $38 billion for lesser debt.

The original deadline was Friday, December 12, but GMAC extended it two weeks because it fell nearly $17 billion short of its goal.

Bondholders agreed today to enahnced terms for a debt exchange, but GMAC still is far short of what it needs.

GMAC's precarious position is dicey for GM dealers. Several analysts believe GMAC will have to pull its floor plan financing from all of its dealers -- as many as 40% of GM dealers finance with GMAC -- if the company is unable to secure bank status.

Conceivably, 40% of GM dealers could be out of business sometime in January if GMAC does not survive.