Tuesday, December 30, 2008

Treasury to Lend GMAC $6 Billion; SEC Changes Oil & Natural Gas Reporting

Treasury to Lend GMAC/GM $6 Billion

The U.S. Treasury said on Monday it was pumping $5 billion into auto and mortgage lender GMAC, LLC and lending up to $1 billion to automaker General Motors, ensuring the solvency of a company considered crucial to GM's survival - to be used for restructuring GMAC as a bank holding company. The Treasury Department said it would buy $5 billion in senior preferred equity with an 8% dividend from GMAC.

The Treasury said it was dipping into a $700 billion bailout fund to buy equity in GMAC and lend to GM, the latest in a string of capital injections aimed at easing the worst credit crisis since the 1930s.

Last week, GMAC won Federal Reserve approval to become a bank holding company, giving it access to the emergency source of funds and helping it avoid bankruptcy. The company, co-owned by GM and private equity firm Cerberus, has lost $7.9 billion over the last five quarters as the credit crunch lifted its borrowing costs sharply and the value of many of its assets plunged.

SEC Changes Oil & Natural Gas Reporting

U.S. securities regulators adopted rules giving investors a more complete picture of the oil and natural gas reserves that a company holds, the Securities and Exchange Commission said on Monday.

Under the new SEC rules that are supported by the energy industry, oil and gas companies will be allowed to disclose their probable and possible reserves to investors. Current rules require disclosure of only proved reserves, but many companies provide all three.

The SEC would also require companies to report oil and gas reserves using an average price based on the prior 12-month period, rather than a year-end price (as currently used). That would help investors compare companies' reserve estimates and mitigate price distortions, the SEC has said.

Companies have to comply with the new reporting requirements after December 15, 2009.

"These updated rules consider the significant changes that have taken place in the oil and gas industry since the adoption of the original reporting requirements more than 25 years ago," John White, head of the SEC's corporation finance division, said in a statement.

Source: Reuters

No comments: