Stalled engine

29 March 2006 By Antony Currie Follow @AntonyMCurrie

Selling a majority stake in GM s finance unit was proving to be tough as it was. Now GMAC is restating three years of financials. That could scare off bidders. Or it could force down the price. A sale is looking increasingly troubled.

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General Motors announced on Tuesday that finance subsidiary GMAC would be restating its financials for 2003, 2004 and the first three quarters of 2005. The cause was improper classification of cash flows for mortgage loans in its residential mortgage subsidiary, now called ResCap.

GM first discovered the problem two weeks ago, and delayed filing its 10K with the SEC as a result. The 10K has now been filed, although it states that we are uncertain at this time that any transaction with respect to GMAC or ResCap will occur, or, if any transaction were to occur, on what terms.

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