Ally Financial Inc. · NYSE:ALLY
Ally Financial — Gmac — Debt Investor Presentation (December 2006)
30 slides from Ally Financial's debt investor presentation, Dec 1, 2006
Slide 1: GMAC Fixed Income Investor Presentation
GMAC Fixed Income Investor Presentation December 1, 2006 10:00 a.m. EST
Slide 2: Forward Looking Statements
Forward Looking Statements 1 In the presentation that follows and in related comments by GMAC LLC ("GMAC") management, our use of the words "expect", "anticipate", "estimate", "forecast", "objective", "plan", "could", "should", "would", "may", "goal", "project", "outlook"," "priorities," "targets",
Slide 3: Introduction
Introduction Following the Nov. 30th closing of the GMAC transaction, GMAC has emerged as an independent company with an improved credit profile New ownership Independent governance Strengthened capital position New and expanded funding facilities Formalized long-term operating agreements with GM Br
Slide 4: Independence: De-Linkage From GM
GMAC Independence De-Linkage From GM GM has ceded majority ownership and voting control GM-GMAC operating relationship codified in operating agreements Stronger corporate governance with independent board members GMAC management compensation is tied to GMAC's performance Significant reduction in cre
Slide 5: Independence: Credit markets corroborate de-linkage from GM
GMAC Independence Credit markets corroborate the de-linkage of the GMAC credit risk from GM Nov-05 Nov-06
Slide 6: Credit Profile Strengthened
GMAC Credit Profile Strengthened Credit Profile New $1.9 billion layer of preferred equity injected Essentially all 2007-2008 "after-tax earnings" to be retained by GMAC All 2009-2011 after-tax profit distributions to Cerberus to be re-invested in GMAC as preferred equity Unsecured exposure to GM in
Slide 7: 5-Year Unsecured Bond Spreads
GMAC 5-Year Unsecured Bond Spreads GMAC bond spreads have narrowed to the lowest level since mid-2004 Nonetheless, GMAC 5-Year spreads still 100 bps above those of the BBB composite GMAC 5 Year Spread (Versus Treasury) Nov-06
Slide 8: Leadership positions across all major sectors
Leadership positions across all major sectors #1 auto finance Top ten player in mortgage #1 provider of Auto Extended Warranty #1 provider of dealer inventory insurance Tremendous asset origination capability World-class servicing Well-managed risk profile Global franchise spanning roughly 40 countr
Slide 9: Transformation
GMAC Transformation 0 Financing Mortgage Insurance 0.7 0.19 0.11 2001 $1.8B Net Income Over the past several years, GMAC has reshaped itself from an automotive finance company to a more diversified financial services company 0 Financing Mortgage Insurance 0.37 0.48 0.15 2005 $2.8B* Net Income As GMA
Slide 10: Value Play
"VALUE PLAY" Increase the return on capital to equity holders by strengthening the bondholder profile and reducing funding costs on GMAC's very large borrowing base Symmetry of Shareholder/Bondholder Interest Interests of GMAC equity holders uniquely aligned with GMAC bondholders and other creditors
Slide 11: GMAC Net Income
2001 2002 2003 2004 2005 2006 Q3 YTD 1.351 1.346 2.163 2.2 2.219 1.943 0.434 0.61 0.63 0.524 0.434 $ Billions GMAC Net Income Q4 * * *These amounts are non-GAAP financial measures. Net income presented for 2005 excludes a goodwill impairment charge of $439 million ($398 million related to Commercial
Slide 12: Financial Services Key Metrics 2006
GMAC FINANCIAL SERVICES Key Metrics -- 2006 Auto Finance Insurance - Revenue - Revenue - Credit losses - Underwriting Results Le | (ie) - Operating Expenses Le ] - Combined Ratio a _R | - Lease Residuals - Investment Income - Unsecured Funding Cost
Slide 13: ResCap 2006-2007
ResCap 2006-2007 Mortgage Industry Environment Cooling Housing Market Declining home sales Declining mortgage originations Increase in 2007 Delinquencies Higher consumer leverage Wider use of non-traditional mortgages Slower rate of home price appreciation Constrained Margins Industry consolidation
Slide 14: Strategic Priorities 2007-2008
Strategic Priorities 2007-2008 Funding Plan Initiatives Operating Plan Initiatives GMAC Funding Plan, Capital Plan, and Operating Plan initiatives all designed to underpin these strategic priorities 2007-2008 Strategic Initiatives Capital Plan Initiatives Strategic Priorities Strengthen Capital Base
Slide 15: Funding Plan
GMAC FINANCIAL SERVICES Funding Plan |
Slide 16: Strategic Priorities: Funding Initiatives
Strategic Priorities Funding Initiatives Reduce large cash balances Manage liabilities to reduce expensive "legacy" debt Maintain significant retail auto loan "dry powder", which can be monetized through committed whole loan facilities Enhance securitization programs to expand asset eligibility Cont
Slide 17: U.S. Auto Funding Issuances and Strategy
U.S. Auto Funding Issuances U.S. Auto Funding Strategy Re-enter unsecured bond market in a disciplined manner Continue significant use of securitizations/whole loan sales Continue to diversify across markets, asset types, currencies, investor profiles Aggregate projected funding in 2007-2008 consist
Slide 18: Liquidity Insurance
Liquidity Insurance GMAC maintains exceptional liquidity insurance $Billions Amount (As of Sep 30, 2006) Global Cash* $14 Available Bank Credit/Conduit Facilities $56 Whole Loan Commitments $48 Total Liquidity Insurance $118 * Includes $5B in cash invested in a portfolio of highly liquid marketable
Slide 19: Capital Plan
GMAC FINANCIAL SERVICES Capital Plan ,
Slide 20: GMAC Capitalization Summary
Common Equity Ownership Consortium 51% GM 49% Long-term investment by Consortium Committed to a 5-year minimum hold period Restrictions on IPOs of secondary shares Restrictions on sale of material subsidiaries In years 1-2 after closing, agreement to retain all GMAC's "after-tax" earnings In years 3
Slide 21: Capital Base
GMAC Capital Base GMAC equity balance at November 30th closing estimated at $18 billion Decline from Q3-2006 balance primarily stems from the "lease asset carve out" Approximately $14 billion of auto leases and ~$10 billion of related funding were transferred to GM prior to closing Q3 2006 Equity Ba
Slide 22: Lease assets retained by GM
Prior to closing, approximately $14 billion of lease assets were transferred to GM along with $10 billion of associated funding Net book value estimated at about $4 billion Transfer of lease assets to GM eliminates exposure to potential weaker residual values on these leases upon vehicle remarketing
Slide 23: Capital Planning Priorities
Establish GMAC capital structure to support solid investment grade ratings Seeking to establish trajectory for an ultimate strong "A" rating Ensure capital base is consistent with economic capital requirements Build capital base -- in line with significant earnings retention/re-investment provisions
Slide 24: Operating Plan Initiatives
Operating Plan Initiatives
Slide 25: Strategic Priorities: Operating Strategies
Strategic Priorities Operating Strategies Diversify operations beyond GM-related businesses Leverage existing dealer relationship to expand presence in non-GM dealer network Retail Auto Finance Dealer floor plan financing Grow Mortgage revenue Continue to gain share of the U.S. mortgage market as in
Slide 26: Transaction Benefits Summary
Strengthened GMAC capital base long-term Preferred equity injection of $1.9 billion Earnings reinvestment provisions Transaction has achieved credit rating de-linkage from GM Governance provisions have further enhanced GMAC independence from GM Cap on unsecured credit exposure to GM Contractual arm'
Slide 27: Appendix
GMAC FINANCIAL SERVICES Appendix
Slide 28: GM Call Option on Global Auto Finance Business
GM Call Option GM call option term of ten years on global Auto Finance business Does not include Mortgage and Insurance operations Can exercise if GM ratings are investment grade or are higher than GMAC's ratings Exercise price greater of: Fair market value 9.5 times the global Auto Finance business
Slide 29: Corporate Governance
Cerberus FIM Investors, LLC is the managing owner of GMAC LLC through control of the Consortium's 51% voting shares Board Composition: 13 Board members Consortium: 6 GM: 4 Independent: 3 (2 appointed by Consortium, 1 by GM) Majority Independent Director approval required for certain matters: An incr
Slide 30: Mutually-Beneficial Services Agreements
Services Agreements support key GM-GMAC objectives: GM: Strategic support for GM vehicle sales worldwide GMAC: Increased finance penetration and revenue GMAC granted 10-year exclusivity covering U.S., Canadian and International subvented wholesale and consumer business GMAC commitment to provide fin